Inside Markets

It’s a relatively quiet session as market participants wait for directional clues in tomorrow’s CPI report and Fed meeting minutes. Bond markets remain priced for a 25bp May rate hike and ~60bp of rate cuts through January ’24.

Wednesday's CPI print should provide more clarity for the Fed's expected near-term policy path.

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An expected collapse in bank credit creation should accelerate the disinflationary cycle.

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The S&P 500 (SPX) has moved into a strong technical resistance range between 4050-4200 with a challenging fundamental backdrop. Breaking above ~4200 likely requires a change in macro fundamentals, specifically a Fed pivot. 

Last week’s AAII survey continues to signal elevated bearish sentiment, while internal client surveys at sell-side firms reach bearish extremes.

Technical signs of a peak in nominal yields occurred two weeks prior to Silicon Valley Bank and Signature Bank headlines.

The S&P 500 tries to break above the 3950-4000 resistance as bank contagion appears temporarily contained and implied volatility fades.

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FCNA’s acquisition of SIVB assets and deposits has helped near-term risk sentiment, but markets are still looking for additional policy measures from the Fed, FDIC and Treasury.