Risk Parity back

After a day of Unwinds the risk parity trade back on track as both treasuries,bonds just above yesterday’s highs and stocks,spx +.6% higher today. The heavy dose of Fed speak reiterates: inflation not a problem in fact persistently low inflation is a bigger problem,We still believe in phillips curve and the neutral Rate of Interest likely to stay depressed for some time.A quick note on phillips curve if we take Williams and Daly at their word then Jobs gains can continue without sparking wage gains,further evidence that higher inflation is not a worry. Clarida also said that Fed will be looking at new ways to Stimulate economy when the time comes,such as capping yields on treasuries,I thought a bold an important statement.SPX needs to trade above 2800 to get another shot of upside momentum,10 year yields need to break below 2.61% to get break the sideways range it has been stuck in.

Feds powell testifies next week,Q4 GDP,Housing Starts so plenty of event risk to create some volatility,I hope,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.