Last week saw an accelerated flight to safety and then short covering at key Levels.
However, as I type this, Equity markets are balanced and modestly higher following comments of renewed US-China Trade Talks in Globex. We'll see whether this is real or posturing given recent bouts of market volatility.
Speaking of volatility, the SP500 Weekly Implied Move is again + / - 58 points or an Upper Bound of 2946.65 and a Lower Bound of 2830.71. Of course, high-low ranges have been greater than that on a daily basis. The median daily range is a whopping 69 points month-to-date compared to a median 29 points year-to-date.
We continue to expect elevated market activity and above normal market ranges this week since VVIX (Volatility of Volatility) closed Friday at 110.
With Economic Releases relatively light this week except for PMIs and the FOMC Minutes, focus will be on further geopolitical news and the all-important Fed Chair Powell's Speech from the Jackson Hole Economic Policy Symposium on Friday.
Asymmetric risk is building depending on the outcome of what the Fed says and ultimately does in September versus the Market's expectations for a minimum of 2 Fed Funds Rate Cuts this year.
Notably, for September, expectations of a cut of 50 basis points have recently grown to 30%.
Additionally, focus will remain on the US Treasury Actives Curve and swap spreads.
It's interesting that Safe Haven Assets returns have accelerated. Whether this is an aberration, bears monitoring when compared to prior periods of accelerated rate-of-change and subsequent market reversals amid economic downturns.
This context matters since longer-term Trends are clearly up; whereas, intermediate-term Trends are down and the short-term Bias remains Up.
Have a great week.
All the best,