Chart of the Week and Weekly Report Highlights

This week: Macro Sentiment, EM Equities, Sentiment & Technicals Check (near-term market outlook), Inflation Transit, Crude & Commodities...

This email provides a look at what we covered in the latest Weekly Insights report

The weekly insights report presents some of the key findings from our institutional research service, providing an entrée experience (in terms of price and size).

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Chart of the Week - Fed behind the curve

Fed behind the curve:  The chart below compares our composite inflation expectations indicator with the annual rate of change of the Fed funds rate. Side by side the comparison shows the Fed has resolutely positioned itself well behind the curve in terms of managing inflation expectations.

It is not really surprising then to see them ‘retire’ the transitory inflation narrative. Further monetary tightening will be needed, with an accelerated taper and rate hikes likely in the near term as the Fed attempts to play catch up.

It’s likely that the Fed begins to prioritize “Main Street vs Wall Street“ as inflation becomes a political issue, and the jobs market continues to run hot — so in that respect I would argue that the Fed no longer “has our back“ in the markets (remember: the old saying ‘don’t fight the Fed’ means don’t overstay your welcome in either direction when the Fed changes its policy direction).

Key point:  Persistent inflation will require further tightening of monetary policy.

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Topics covered in the latest Weekly Insights Report:

• Investor Sentiment: Composite measures show a stark shift in sentiment.

• EM Equities: No cause to remove EM risk watch yet, but a big reset already.

• WTI Crude Technicals: a “healthy correction“?

• Sentiment & Technicals Check: High odds of a bounce, but risks remain.

• Inflation Transit: Powell Policy Pivot a key issue to factor in.

• Crude & Commodities: Longer term oil outlook and commodities at risk.

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Subscribe now to get instant access to the report so you can check out the details around these themes, as well as gaining access to the full archive of reports.

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Thanks for your interest. Feedback and thoughts welcome.

Sincerely,
Callum Thomas
Head of Research and Founder at Topdown Charts

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