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Another blah day of trading, although volume levels did increase, the trading range was very tight if not for some intraday fireworks with the Trump-Powell saga. Otherwise, the pinning effects of July opex are in full force right now, which means we probably remain in this tight range until we get through Friday.
More importantly, we get import/export prices tomorrow along with claims data. Import prices are expected to rise by 0.3% m/m from 0.0% in May. I guess if there is going to be tariff inflation, that is where we are likely to see it tomorrow. 5-Year CPI swaps traded up again today, closing above 2.6%, their highest level since October 2023.
Even 10-year CPI swaps are trading higher and are now 2.54%. These aren’t short-term inflation expectations rising, these are long-term inflation expectations, and what seems concerning about them is where they are currently. I mean, we are talking about a potential new Fed chair that is going to come and start cutting rates, at a time when long-term inflation expectations are in a position to really run higher.
Well, the 10/2 today finally broke out of the flag pattern, but it happened because the 2-year fell by 5 bps, and the 10-year fell 3 bps. It could be a false start, but we should find out more in the coming days.
Meta broke support today, falling below $710, and volume has been steadily increasing as momentum has faded. The next place for support probably comes around $680. The 2b top in Meta is important because the market, for the most part, has been heavily reliant on Meta and Nvidia in its recovery, and if Meta starts to fade, I think it will tell us a lot about where the market goes overall.
Anyway, that’s all for now.
-Mike
Terms By ChatGPT:
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July opex: Short for July options expiration, referring to the monthly event when stock and index options contracts expire, often causing increased volatility or pinning effects in markets.
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Pinning effects: A phenomenon where stock prices remain near popular strike prices during options expiration periods due to market dynamics and hedging activities.
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Import/export prices: Economic indicators tracking changes in the prices of goods and services imported or exported, reflecting inflation pressures and economic health.
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Tariff inflation: Inflation arising from increased costs due to tariffs or trade restrictions, potentially impacting import prices and consumer goods.
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CPI swaps: Financial derivatives used to hedge or speculate on future inflation rates, reflecting market expectations for inflation.
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10/2 (yield spread): The difference between yields on 10-year and 2-year Treasury bonds, often used as a recession indicator or economic outlook gauge.
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bps (basis points): A unit equal to 0.01%, used to describe changes in financial rates and yields.
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2b top: A bearish chart pattern indicating a potential reversal after a failed attempt to break above previous highs, suggesting market weakness.
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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