January 10, 2023

Markets:

Stock futures were down Tuesday as concern over higher rates lingered among traders awaiting comments from a closely followed Federal Reserve leader.

Atlanta Fed President Raphael Bostic said Monday that interest rates should rise above 5% and stay there for a “long time.” Meanwhile, San Francisco Fed President Mary Daly said the central bank should continue raising rates, albeit at a slower pace. Treasury yields rose slightly on Tuesday.

Those comments came ahead of a speech by Fed Chair Jerome Powell slated for 9 a.m. ET Tuesday. Investors will parse his comments for tea leaves into how the Fed will respond next in its attempt to cool inflation.

Investors came into the new year worried that higher Fed rates could tip the economy into a recession. However, many appear to be mounting bets that inflation is starting to ease.

Depending on how CPI data fares Thursday, the bond market could push the Fed to make February the last rate hike before cuts, Lee added. Investors will also watch Friday for big bank earnings and consumer sentiment data.

Portfolio:

We enter the new trading session holding positions in UMC, PDSB, and FLYW.  Wild day yesterday with a massive swing based on Fed comments.  Today we have Powell in the morning that should spark further price movement.  Traders will keep a close eye on 3900 and continue to watch price activity at this key level.   ES is sitting right at resistance which is acting as support, if we can clear it, then we have an interesting chart building and could make for an exciting day technically.  Watching this closely.  Be ready for updates and a potential new trade alert.  We want to remain patient here but technically, could be setting up nicely here.