Syz the moment

While the market has been anticipating the first Federal Reserve rate cut in the summer of 2023 for the past year, improving economic growth sentiment and a still strong job market have led the market to revise its expectations. Indeed, the spread between the SOFR 3-month June and September 2023 futures turned positive yesterday, reflecting the fact that no further rate cuts are expected by the market from June to September. Source: Bloomberg

Source: Statista

Sourc: Bloomberg, Tavi Costa, Crescat Capital

January US CPI was inline with Street estimates on MoM basis, coming in +0.5% for the headline number and +0.4% for the core. On YoY basis, things ran bit hot, coming in +6.4% headline (down from +6.5% in December but ahead of Street estimates at +6.2%) and +5.6% for the core (down from +5.7% but ahead of St’s +5.5%. Source: Bloomberg, HolgerZ

On the back of somewhat hot CPI data, The US 6 month T-Bill breaches 5% for 1st time since 2007. Source: HolgerZ, Bloomberg

Last week, one of the largest ETFs tracking U.S. high yield bonds, the HYG or iShares iBoxx HY Corporate Bond ETF, had its largest outflow since 2020. Valuations are stretched in high yield despite solide fundamentals. Any spike in equity volatility could quickly negatively impact this segment. Source: Bloomberg

Bulls finally outnumbered Bears in this week's AAII Sentiment Poll, ending a record streak of 44 consecutive weeks of bearish sentiment. We haven't seen more Bulls than Bears in this poll since March 2022. Source: Charlie Bilello

We continue to see new highs > new lows (27 days in a row is longest stretch since mid-2021) and that is bull market behavior. Source: Willie Delwiche