DXY/ZN Ratio Chart (USDollar Index against 10Y US Notes) Is Pointing Much Lower, which can keep USDollar under bearish pressure from technical and Elliott wave perspective.
There is no doubt that the market doesn’t like tariffs; stocks sell off every time Trump announces a new round, but so far, the effect hasn’t lingered.
The S&P 500 trades at elevated multiples. Earnings expectations for this year and next are very high. Enter macro uncertainty surrounding the fiscal/tariff policy of the Trump administration.
A little over a month ago as Donald Trump was about to take office as President, the 10-year Treasury note yield hit 4.80%. Almost every economist was writing that the 10-year would hit 5% due to inflation from tariffs. Some disagreed - and still do.
Since September last year, 23 – or thereabouts – has posed difficulty for volatility bulls, and this trend prevailed this week as well.
VIX for now is probably headed lower.
Sticky inflation risk is still a threat for the bond market, but concern that the US economy is slowing has become the main factor driving Treasury yields lower recently.
Stocks fell sharply, with the S&P 500 leading the decline, finishing the day down almost 1.6% at 5,860. Meanwhile, the NDX dropped nearly 2.75%, closing at 20,550.
There are signs of trouble ahead, like economic slowdown and resurgent inflation, but also signs of strength, like healthy demand - at least in some places.
Forecasts for the January Personal Consumption Expenditures Price Index report, scheduled for release on Friday, point to overall inflation remaining higher than the Federal Reserve prefers.
During Donald Trump’s first term, some investors bought into the Trump 1.0 Put. The trade was based on the market’s belief that Trump believed the stock market’s performance was a referendum on his presidency.
