Hold the Line
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Risk assets chopped lower last week amid Powell’s speech at the September Federal Open Market Committee reaffirming his resolve in tackling inflation.
The market was positioned for a bullish rally that quickly sold off as the market digested the rest of Powell’s speech.
We are living in a time of historic fixed income and FX volatility. The Dollar (as measured by the DXY) continues to break multi-decade highs, with last week’s gain clocking in as the largest in over 30 years.
Foreign FX continues to trade like a shitcoin, with the GBP’s move late Sunday night triggering circuit breakers.
US Treasuries continue to sell off as the 2Y pierces 4%. Markets are now pricing terminal rates at 4.6%.
Rumors swirl of foreign sovereigns dumping US Treasuries to shore up their own credit and FX markets.
Italy seems like the weak link in the Euro, as much of its energy depends on Russian natural gas. This winter’s climate will prove to be quite consequential geopolitically and for subsequent market dynamics. Keep an eye out for concessions and negotiations in the Eurozone
Equities and Crypto assets appear relatively apathetic to the volatility in Fixed Income and FX markets.
Bitcoin has been holding up quite well vs S&P. Some view this relative strength as sign of macro seller exhaustion in Bitcoin, perhaps a sign of a crypto bottom.
Volt Performance
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