What is odd about this whole thing, regarding volatility, is that the ratio between oil and gold volatility is not nearly as wide. Clearly, oil and gold vol are elevated, and S&P 500 vol is not.
Mott Capital Management, LLC
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Stocks finished mixed, and 1-year inflation expectations appear to be coiling, with a bullish-looking flag of their own, suggesting higher inflation may be on the way.
There are many things happening at once, which is creating a fair amount of confusion in the market. If financial conditions don't tighten, then the stock market can rebound.
A sharp decline in the price of oil occurred amid speculation that the war in Iran may be over soon, given President Trump’s willingness to negotiate. However, those claims appear to have been denied by the Iranian government, leaving investors largely uncertain about what happens next.
The S&P 500 dropped more than 1% on Friday as oil prices surged and the job report came in well below estimates. An open around $95 for oil would place it at its next level of resistance and its highest price since September 2023.
This week may bring a perfect storm, - quite literally, as a bomb cyclone spins off the Northeast coast. With options expiration now behind us, markets could face their own storm.
Looking at data points seems like a waste of time. They used to matter, and given that the next Fed meeting isn’t until mid-March, the market will probably look through the report anyway.
It seems as though the Treasury may be preparing the market for a potential change in issuance sizes or duration at some point in the not-too-distant future, though that is admittedly speculative.
The implied volatility selling that really started around Thanksgiving and then reemerged during Christmas now appears largely complete. The calendar will no longer be the market’s friend.
As the year comes to a close, with just about two weeks left, there is going to be plenty of news flow with consequences for global markets.
Regardless of the broader debate, one thing does seem clear: if the Fed were truly on the verge of launching a new QE program — someone forgot to tell the three-month Treasury bill.
The middle of this week saw a volatile trading session, with the S&P 500 finishing up about 40 basis points. And then there was Nvidia doing its usual song and dance with the beat-and-raise routine it trots out every quarter.