The Market: A Precarious Set-Up

A decidedly hawkish Waller paved the way for a full and complete retest of the early August SPY $510-520 level ahead of the September 18 FOMC (likely by Monday).

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Discussion

In yesterday’s NFP + Waller note I detailed my expectation for a sturdy bounce in equities on a seemingly dovish prospect for a 50 bps rate cut on September 18 as communicated by FRB Governor Christopher Waller this morning. My expectation for a bounce was bolstered by a multi-day bullish divergence in IG CDX vs. SPY.