Hi everyone,
Sorry for no update yesterday. I had some awful dental work done and I was in the worst imaginable pain. So today, let’s look at some macro data, SPX levels (we’re breaking down cluster of supports), and some trade ideas.
As most of this year, geopolitical risk is elevated again. Consumer confidence just collapsed to 81.9 from 88.6 in August. PCE lands today, and jobs land Friday. Both matter.
There are not many great setups right now. That is why we did not take many new trades. Markets do not always offer clean entries. Respecting that is part of the process.
The week’s defining number
The Conference Board’s consumer confidence index fell to 81.9. That is the lowest reading since 2014 and well below what economists expected.
That drop raises a simple question for Wednesday’s PCE report: does spending still show the surge many expected, near 0.7% to 0.8%, or has the August retail-sales strength already started to fade?
Friday’s jobs report is the next test. Can the labor market hold up after this drop in confidence, or does the weakness start to show there too? The Fed’s problem is the same as it has been: weak confidence on one side, inflation that is still too high on the other.
Iran is the headline. Yields are the bigger issue.
Geopolitical markets can turn on one surprise. The Iran situation is that kind of catalyst. The effect on oil is real and immediate. WTI 0.00%↑ has been down towards $92 now, let’s see if it keeps going lower, which would be great, but the larger pressure is still in Treasuries.
Bond prices are falling. Yields are rising.
The 10-year has been trading around the mid-5% area, and the 30-year recently hit its highest level since 2002. That is the bigger elephant in the room.
What we are watching
