US equities were weaker Friday, with S&P down 1% with similar declines through Europe as the market continued to absorb last week’s hawkish ECB and Fed messaging. S&P was 2% lower over the week. US10yr yields were up 3bps to 3.48% on Friday, down 10bps over the week.

With no shortage of economic headwinds, investors struggle to find something cheerful about this holiday week after the two most dominant central banks cast a pall over the proceedings.

Despite nascent progress on inflation, Central Bank’s hawkish beatdown, motivated by the fight against financial conditions that have refused to tighten sufficiently and a still highly tight labour market with substantial momentum, is leaving the market to pick up the pieces of its own volition.

Given the current backdrop, it’s easy to assume institutional players remain underweight as we near downside systematic trigger territory.


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As if weighty volatility weren’t enough for oil traders to jockey for position around, questions are getting raised over the quality of the fundamental data itself in the wake of US EIA’s ‘supply adjustment.’ mechanism.

Given that the EIA is the most followed weekly data in global oil markets, reliability concerns are seeping into the equation (Supply Adjustment = Refinery Runs + Crude Exports + Crude Stock Builds – Crude Production – Crude Imports), adding another unwelcome level of volatility, given that the adjustment could reflect actual supply.

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT