$SPY $QQQ to remain haywire until T10Y2Y inversion confirms
Recently Global Markets had experience some unprecedented fluctuations amid pandemic-endemic transition in a growing geopolitical conflicts between Russia-Ukraine, sending
QQQ
slightly to bearish market earlier in March 2022. Later in the month, the trend reversed, breaking 200MA resistance. We anticipate the market will remain volatile for the coming weeks until (1) 10y-2y yield inversion confirms, (2) CPI for March is released.
Market is pricing in 6-7 interest hikes, aiming for 2.75% target rate until EOY 2023.
Job market data is strong. According to US Department of Labor, March 24th jobless claims is at 187K, lower than pre-pandemic level.
Yield Curve Inversion is all time low.
T10Y2Y
is at around 0.20, and on a downtrend. Historically, when the inversion occurs bringing it to 0, it indicates an upcoming recession.
Geopolitical conflicts to be resolved between Ukraine and Russia. Aside from thousands of tragic loss in military and civilians, it casted upward pressure on some of the essential commodities like
CL1!
ZW1!
ZC1!
NICKEL1!
. These are putting an added pressure for FOMC to control the aggressively hiking inflation rates.
Inflationary Risks. February yoy CPI printed at 7.9%. March yoy CPI is being released on April 12th. If the Fed wasn't able to deploy an effective QT to control rising prices, and if the CPI prints above the consensus, this will likely cause a negative shock to the market.
QQQ
slightly to bearish market earlier in March 2022. Later in the month, the trend reversed, breaking 200MA resistance. We anticipate the market will remain volatile for the coming weeks until (1) 10y-2y yield inversion confirms, (2) CPI for March is released. Market is pricing in 6-7 interest hikes, aiming for 2.75% target rate until EOY 2023.
Job market data is strong. According to US Department of Labor, March 24th jobless claims is at 187K, lower than pre-pandemic level.
Yield Curve Inversion is all time low.
T10Y2Y
is at around 0.20, and on a downtrend. Historically, when the inversion occurs bringing it to 0, it indicates an upcoming recession. Geopolitical conflicts to be resolved between Ukraine and Russia. Aside from thousands of tragic loss in military and civilians, it casted upward pressure on some of the essential commodities like
CL1!
ZW1!
ZC1!
NICKEL1!
. These are putting an added pressure for FOMC to control the aggressively hiking inflation rates. Inflationary Risks. February yoy CPI printed at 7.9%. March yoy CPI is being released on April 12th. If the Fed wasn't able to deploy an effective QT to control rising prices, and if the CPI prints above the consensus, this will likely cause a negative shock to the market.