With all eyes on the market's traditional risk measure - VIX, tracking the forward-looking view of S&P 500 volatility - and the ever-higher prices of Tech stocks, a funny thing happened under the surface that is starting to worry some...
As S&P 'VIX' enedlessly limps lower, implied equity volatility for Tech stocks has been rising for two months...
Ignoring the "relatively soon" balance sheet unwind, the dollar index is careening lower (at 14-month lows) on inflation-weaker signals from The Fed.
And gold spiked back above its 200DMA ($1251)...
However, stocks limped higher as VIX crashed to a record low 8.84...
As Bond traders feel the short squeeze coming on...
With 'zero' expectations for a rate-hike today, all eyes are focused on any shifts in The Fed's balance sheet normalization timeline ("balance sheet unwind to start relatively soon") and its most-recently-dovish inflation outlook (following the weak June CPI print, The Fed now says "inflation seen rising to 2%" but is weaker").
Key takeaways from FOMC:
From 720Global
Below are 22 troublesome facts explaining why the herd may, in fact, have it wrong.
Equity/Bond Valuations
WTI prices kneejerked higher after last night's yuge crude inventory draw reported by API but prices have leaked lower into the DOE print. Expectations were for a 4th straight weekly draw in crude (thanks to robust refining activity) were confirmed with a 7.2mm inventory drop (less than API's 10.2mm), and Gasoline also saw a major draw (as opposed to API's build). However, exuberance in WTI is not evident as Lower 48 production surge above 9mm barrels for the first time since July 2015.
API