Discussion
TIPS 10s are on the move, XLU is outperforming (notable given the move up in rates), HY CDX continues to show decisive signs of bottoming out, and VVIX is moving higher while outperforming VIX. This is EXACTLY what we need to see continue into that July 19 opex window Cem Karsan discussed last week in order to take a high probability shot on the short side ahead of the September/October danger zone.
FOMC minutes are out today, so there is obviously some risk-off behavior ahead of that. But we still have seasonal strength, BOM flows, and “vol pinning” under this market as we head into earnings season. But make no mistake, the Fed is squeezing the economy and financial markets - it’s just a matter of time before the SPX rolls over in a manner the Fed cannot control with simple rhetoric.