Good Sunday evening MacroEdge Readers & Community,
It’s early Monday morning PST now, but we’ll leave the greeting unchanged to kick-off what should be a fantastic, and very dynamic week ahead of us.
This weekend we saw a similar re-run to many other weekends throughout the year - with talks of peace, war, escalation, and everything in between. Price action (in equities) has broadly been very boring over the last 6-8 weeks, and specific cyclical, and fuel sensitive industries like freight, airlines, and cruise companies have finally started to respond to the negative impacts from record high jet fuel and diesel prices. Additionally, there’s been some minor tremors in regional banking again marked by the failure of Nano Bank - a bank with about $750 million in assets in Irvine, California. Again, while not enormous, it is something to keep an eye on with yields surging to cycle highs. In this oil price transition month - being October - which I discussed more in-depth this evening in the Weekly Oil & Gas Research Macro Note - I continue to expect that bond yields will see further upside pressure. The inflation situation is completely and totally underreported by CPI (and other alternative measures right now) and the bond market seems to be the last place we’ll get a real take on what’s actually going on… Bond vigilantes are still in the 6 month window for price discovery - which I marked starting in May - beyond that point we could very well find ourselves moving toward a YCC-world…
The 10Y going parabolic will have real implications for the economy - all the way down to things like data center financing:
