Discussion
At least so far today as of 12:46pm EST, it appears the equity market called the bond market’s bluff. NDX didn’t fall nearly as much as one would have expected given the move in rates, and clearly that was in anticipation of rates coming in on soft NFP internals. Today’s action is precisely the “threading of the soft landing needle” I’ve been referring to. Given how rates have stayed high and sticky in response to weak data over the last month or so, I’m surprised at how rates have stuck the move lower in response to NFP today. I’m not entirely convinced this isn’t just a consolidation after a big move higher, but I have to admit today’s cross-asset price action is in line with a bullish threading of the soft landing needle. VVIX isn’t confirming the move lower in VIX, typically a dynamic that says not all is clear on the upside, but that’s about it on the bearish divergence front. We’ll see how things trade into early next week.