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Cem Karsan Explains Why Bonds Rallied on a Hot CPI Report
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ticker lesson
Breakdown
0:00lesson
CPI data and market reaction
- CPI data not hotter than expected but slightly warmer
- Month-on-month headline as expected
- Core CPI hotter on year-on-year basis
- Markets react strongly to data despite expectations
- S&P 500, NASDAQ, Russell all decline
2:29lesson
Bonds and risk-off move
- Bonds initially expected rate hikes and yields up
- Bonds turned around completely
- Money needs to find a home
- Bond market toxic in general
- Risk-off move with irony in bond market
4:54lesson
Flow perspective and V compression
- Long calls in bond market waiting for reversal
- V compression when reversal doesn't play
- Pain trade ends up selling V
- More meh in market sentiment
- Stuck in the mud with V compression
4:55lesson
Open AI and loanable funds
- Open AI missed whisper number by $20 billion
- Hyperscalers and governments compete for loanable funds
- Supply and demand situation at long end
- Pressure on loanable funds may not be as great
- Unclench bonds a little
4:56lesson
Front end and Fed funds futures
- Front end couldn't hold rate hikes
- No extra rate hikes in Fed funds futures
- Cyclical issue may be occurring now
- Hot CPI report and rate hike constraints
- Market stress and cyclical issue
4:57lesson
Political influence on market sentiment
- Trump's comments influence market sentiment
- Midterms as catalyst for market stress
- Trump's 1929 depression comment
- Market people overweight into market
- Trump giving green light to bears
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