One of the lowest event vol days for Powell we’ve had in quite some time, not sure what to expect as his last speech he was a full on dove, so in my head, I figured economy outlook was looking bleak and or something broke, the hot NFP # following that presser completely negated
That thesis hence #bigflip came to fruition as economy was strong and inflation is reaccelerating with demand so strong and a total repricing in the bond market happened. With CPI, PCE & PPI coming in hot, as well as the labor market remaining very tight as the data has shown
Powell either changes his tune from dove to hawkish before things get out of control again, or he says January data was transitory. Any talk of higher terminal rate and or 50bps could be a shock to the markets and with event vol being relatively low compared to previous pressers
Downside opens up. If he still rides the same disinflation story and data is transitory etc… we probably squeeze up, but, the NFP print Friday, if comes in hot will show the data isn’t transitory and that the economy is doing just fine and demand is strong hence inflation… twitter.com/i/web/status/1…
Another thing to note, with $MOVE index trading up and breaking out huge, it’s pretty bewildering to see $VIX only at 18, as @jaredhstocks , and I agree with him, risks in terms of shock on the markets is here imo
One last point to add, powells last speeches were completely contradicted by recent data, everything he said was wrong, I still can’t wrap my head around why he was so dovish his last speeches unless he thought the economy was turning soon but again, recent data negates that for… twitter.com/i/web/status/1…
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