Markets reacting with rates, oil, volatility up. Later today/tomorrow, we could see Treasury and State Dept announce SPR release, potentially with coordinated IEA action. That could symbolically pressure oil.
Asks if this is a put for bonds or equities, expecting central bank support.
Jonathan Ferro
Darrell Cronk
Too early for monetary policy support. Fed on hold. SPR action could lessen upside pressure on rates. Global central banks (ECB, BoE) may have to add stimulus, which changes their calculus.
Asks if he's buying the long end of the yield curve.
Lisa Abramowicz
Darrell Cronk
No. We've been underweight long end expecting higher rates. Best risk/reward is in the belly (intermediate) of the curve.
Asks if there's a fiscal/monetary put for equities.
Lisa Abramowicz
Darrell Cronk
Equity market will have a hard time making the next leg higher without tech and financials participating. They make up 45% of the index.
Asks if this undermines the cyclical recovery/rotation trade.
Jonathan Ferro
Darrell Cronk
People are under-appreciating big structural moves under the surface: commodities, international, value, and small caps have significantly outperformed the market-cap weighted S&P.