Home › Market News › Volatility, Rates, and More Inflation Talk
The Economic Calendar:
MONDAY: Fed Bostic Speech (7:30a CT), Fed Jefferson Speech (7:45a CT), Fed Williams Speech (7:45a CT), CB Leading Index (9:00a CT), Fed Logan Speech (12:00p CT), Fed Kashkari Speech (12:30p CT)
TUESDAY: Redbook (7:55a CT), Fed Barkin Speech (8:00a CT), Fed Bostic Speech (8:00a CT), Fed Collins Speech (8:30a CT), Fed Musalem Speech (12:00p CT), Fed Kugler Speech (4:00p CT), Fed Daly Speech (6:00p CT), Fed Hammack Speech (6:00p CT)
WEDNESDAY: MBA Mortgage Applications (6:00a CT), EIA Petroleum Status Report (9:30a CT), Fed Barkin Speech (11:00a CT), 20-Year Bond Auction (12:00p CT)
THURSDAY: Chicago Fed National Activity Index (7:30a CT), Jobless Claims (7:30a CT), S&P Global Composite PMI Flash (8:45a CT), Existing Home Sales (9:00a CT), EIA Natural Gas Report (9:30a CT), Kansas Fed Manufacturing Index (10:00a CT), Fed Williams Speech (1:00p CT), Fed Balance Sheet (3:30p CT)
FRIDAY: Building Permits (7:00a CT), New Home Sales (9:00a CT), Fed Cook Speech (11:00a CT), Baker Hughes Rig Count (12:00p CT)
Key Events:
The coming week’s packed Federal Reserve speaker schedule deserves particular scrutiny as markets seek clarity on the potential timing of rate adjustments. Understanding each speaker’s historical policy bias provides crucial context for interpreting their comments.
Susan Collins, Boston Fed President, is generally seen as moderate but with a slight hawkish tilt. Her comments about possibly cutting rates later this year, while emphasizing credibility and inflation control, support this view.
Fed Bostic Speech: Moderate (potentially leaning dovish)
Raphael Bostic, Atlanta Fed President, is often classified as a centrist but has shown dovish tendencies recently. His shift to expecting only one rate cut this year (down from two) suggests caution, but his focus on labor market risks leans slightly dovish. The “potentially leaning dovish qualifier is reasonable.
Fed Logan Speech: Moderate/Slightly Hawkish
Lorie Logan, Dallas Fed President, has expressed concerns about inflation risks, particularly with tariffs, suggesting rates may need to stay steady. This aligns with a moderate stance leaning slightly hawkish.
Fed Kashkari Speech: Dovish
Neel Kashkari, Minneapolis Fed President, is widely regarded as dovish, emphasizing labor market strength and tolerance for inflation risks. His view that the Fed’s goals of full employment and price stability are in tension due to tariffs reinforces this bias.
Fed Kugler Speech: Dovish
Adriana Kugler, a Fed Governor, has made limited policy remarks, but her focus on monitoring downside risks to employment suggests a dovish stance. This aligns with your note.
Fed Daly Speech: Dovish
Mary Daly, San Francisco Fed President, is consistently dovish, prioritizing minimal labor market disruption while aiming for the 2% inflation goal. Her neutral-to-dovish stance is well-documented.
Fed Hammack Speech: Bias uncertain without more information
Beth Hammack, Cleveland Fed President, has limited public remarks available, and her bias remains unclear. Her dissent against a recent rate cut suggests possible hawkish leanings, but “uncertain” is accurate without more data.
The remarkable market recovery continues to confound skeptics, with the S&P 500 now up 18% from its April lows and the Nasdaq having officially re-entered bull market territory.
The NASDAQ 100 futures outpaced other major indices with a robust 6.80% 5-day gain, significantly outperforming the broader S&P 500 futures 5.16% advance. The Russell 2000 futures showed comparative strength with a 4.31% 5-day climb, suggesting broadening market participation beyond the mega-cap tech names.
JPMorgan analysts note this has become “one of the most hated rallies” among professional investors, with incremental buying driven primarily by retail investors and corporate buybacks. JPM maintains that “the core elements of the bull case remain intact,” citing macroeconomic resilience, positive earnings momentum, and improving trade war concerns.
Several catalysts could extend the rally further, including strong seasonal patterns that have historically made June and July among the year’s strongest months for equities. Over the past decade, July has delivered a remarkable 3.35% average gain for the S&P 500 with a perfect 100% hit rate, while June has averaged 1.15% with an 80% success rate.
The latest 5-day trading data reveals a notable shift in market leadership as traders position for potential inflation concerns and changing economic conditions. Technology (XLK) posted a solid 7.81% 5-day gain, while Consumer Discretionary (XLY) surged an impressive 8.06% over the same period, significantly outpacing the broader market.
The strong performance in Consumer Discretionary deserves particular attention given the sector’s year-to-date underperformance (-3.71%), suggesting either a technical rebound or a genuine sentiment shift regarding consumer spending resilience despite adverse University of Michigan sentiment readings.
Defensive sectors exhibited surprising strength despite the risk-on environment, with Utilities (XLU) gaining 2.60% and Consumer Staples (XLP) rising 5% over 5 days. This unusual pattern of both cyclical and defensive sectors advancing simultaneously suggests institutional investors may be hedging their bets, maintaining exposure to the rally while simultaneously building positions in traditional safe havens.
The 5-day laggard was Healthcare (XLV), posting a 0.78% decline despite its traditional defensive characteristics, potentially reflecting policy concerns or rotation into higher-beta opportunities.
Financial (XLF) strength (+3.47% over 5 days) aligns with rising interest rate expectations, as higher yields typically benefit banking sector net interest margins.
Interest rate markets recalibrated swiftly after Moody’s U.S. downgrade and Powell’s reaffirmation of the Fed’s 2% inflation target. Fed speakers skewed dovish overall, yet real yields continue to grind higher as nominal rates rise while inflation moderates. This dynamic is tightening financial conditions even as policy rates remain on hold.
Fed Fund futures now assign a 91.7% probability of no change in June, with less than 9% odds of a rate cut. That aligns with Powell’s cautious stance and Fed Governor Barr’s warning that tariff-induced supply shocks may reignite inflation.
Of note: Treasury Secretary Scott Bessent voiced concern over rising rollover costs and fiscal sustainability, hinting at potential shifts in Treasury issuance strategy. If longer-duration auctions falter, look for steepening in the yield curve and volatility in SOFR futures as traders reassess duration risk.
Source: CMEGroup
In a stunning turn of events, the Cboe Volatility Index futures (VIX), Wall Street’s fear gauge, has staged a rapid retreat. After surging above 50, the VIX has swiftly dropped to below 20 in a mere 21 trading days. This marks the fastest decline in volatility on record.
Several factors appear to be contributing to this “volatility crash.” Typically, after significant market shocks, volatility tends to subside as investors regain their footing. Additionally, the hedging activities of dealers can shift from a negative stance to a positive one, which helps to stabilize market prices.
The settling of options markets following major economic data releases, such as the Consumer Price Index (CPI), and corporate earnings announcements also plays a role in calming volatility. Furthermore, near-term volatility has flattened, indicating a period of relative market tranquility for the time being.
Source: TradingView
Walmart’s announcement on Thursday that it will begin raising prices as soon as this month in response to tariffs serves as a stark reminder of the inflation risks from trade policies.
CEO Doug McMillon told investors, “We will do our best to keep our prices as low as possible, but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins.” The world’s largest retailer’s warning suggests inflationary pressures may materialize faster than many analysts have anticipated.
Bitcoin is stuck in a trading range between $101,000 and $105,000.
Bitcoin continues outperforming traditional assets as institutional players increasingly adopt the digital currency. This past week saw a flurry of developments: Coinbase joined the S&P 500, MicroStrategy and Metaplanet added significant BTC to their treasuries, and DeFi Technologies listed on the Nasdaq.
Bitwise CIO Matt Hougan summed up the supply/demand imbalance: “95% of all Bitcoin is already owned, and 95% of investable capital doesn’t own any.” This structural dynamic is a powder keg for potential price appreciation as institutional demand scales.
The failed Senate vote on the GENIUS stablecoin regulation bill was a temporary setback, but behind-the-scenes negotiations suggest a revised bill could advance soon. Watch for bipartisan movement this week—it could unlock a new wave of capital into crypto assets.
Source: TradingView
A timeless insight. The current environment’s swift reversals and sentiment shifts demand intellectual rigor, psychological resilience, and the capacity to adapt without abandoning core principles—precisely the qualities Livermore identified as essential nearly a century ago.
Gold’s recent $300 decline over eight sessions—despite two million Comex contracts traded—was not met with any notable shift in open interest. That discrepancy hints at off-exchange flow, possibly in London or via OTC swaps.
The price action may reflect tactical profit-taking rather than a fundamental reversal. With inflation still sticky and fiscal concerns growing, the medium-term bull case for gold remains intact.
Monitor support around the $3,100-$3,150 range. A breakdown could trigger more liquidation, but the lack of speculative length may limit downside.
Source: TradingView
Systematic trend followers have had a rough go. The SG Trend Index dropped -4.89% in April and is down -9.3% YTD. Abrupt policy reversals—like the early-April tariff volley and subsequent pause—have wreaked havoc on longer-duration models.
But it’s not all doom and gloom. Shorter-term CTAs and hybrid strategies incorporating mean reversion or discretionary overlays have fared better. Discretionary global macro managers, in particular, have thrived in this environment, exploiting sentiment shifts and volatility spikes in FX and bonds. This divergence in performance suggests a growing need for agility and human oversight within the managed futures universe.
