Michele Schneider | Feb 19, 2024 12:37AM ET
Currently, there is no real reason for the Federal Reserve to either hike or lower the interest rates.
The overall market has absorbed these rates better than most expected.
Even with the CPI and PPI coming in hotter than expected, our risk factors have not moved much.
Risk remains on and Friday’s minor correction has yet to appear like anything more than that-minor.
The long bonds are still rangebound, although TLT is testing the lower regions of its trading range at around 92.00.
The chart shows the support level at 92 going back to early December.
This past week’s low is 92.23 and holding.
Momentum is doing better than price.
A break beneath that level (92), could spell trouble for instruments that are highly yield sensitive.
Nonetheless, this earnings season illustrated that growth stocks are just fine.
My “vanity” trades are just fine or pockets of consumer discretionary.
And commodities, especially precious metals, miners and oil, are all consolidating and getting ready to go higher.
So, what would make the Fed change their existing and persistent pause policy?
Many might say, including us, that the market began to show us that it believes the FED will be behind the curve again on both the potential of recession and/or the resurgence of inflation.
Just as we gave you 2 scenarios to watch for a market correction last week-junk bonds rolling over and/or small caps failing 200 in IWM.
Here is silver. Friday it rallied with higher yields and a stronger dollar.
It didn’t care.
Just watch this. A bigger move in silver could be the barometer we have been waiting for in our prediction that more inflation is on the horizon.
FED should be watching too!
h2 ETF Summary/h2
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