Closing Thoughts for the Week

So what exactly did we learn after everything that happened this week? A couple things. There’s still very much a risk-off tone underlying the markets here. I think Treasuries are telling the story here. One area to watch here might be the junk bond market.

This week’s action in the markets only reinforces the idea that stocks are at high risk of experiencing another major downturn and next week could be the point where it accelerates. Treasuries still look like they are still tied to inflation expectations. The bottom line is that next week will be very consequential with inflation and the Fed meeting taking center stage.

Risk-off behavior is looking more and more like a high probability outcome. This is a market that’s demonstrating more reasons for caution than bullishness. The move that’s happening in Treasuries is a really big deal, mainly because it’s the conditions in which it’s happening. The past four weeks have unquestionably been the best period for Treasuries since the early days of the COVID pandemic.