1. Fed Day: The Dot Plot Is What I Care About
The Fed is expected to hold rates today at 3.5%–3.75% — that part’s a lock.
What actually matters is the dot plot dropping alongside the 2:00 PM ET decision. With PCE inflation running closer to 3% and crude oil above $100, Powell faces a genuine stagflation problem — a softening labor market and rising prices at the same time.
Don’t be surprised if the dots push rate cuts later. The press conference at 2:30 PM is where the real show starts imo.
Bank of Canada is also expected to hold today. But, it has more reasons to cut than Fed at the moment. Let’s see.
And, don’t forget: initial move on the market after the announcement a lot of times can be wrong.
2. The Strait of Hormuz: The Only Story That Really Matters Right Now
Iran has effectively closed the Strait of Hormuz. Make no mistake, it is not a disruption. It is a shutdown. Less than 10 ships have passed since the closure vs over 100 on daily basis.
Oil is above $100 today, and Iran is threatening $200 if this drags on. We are also hearing about how Iranian oil infrastructure is getting bombed. You really have to ask if other infrastructure in the region becomes a fair target.
Once again, about 20% of global oil supply flows through that waterway. I also think Canada actually benefits here (stable oil producer).
3. Gold Drops Below $5,000
Gold is trading below $5,000 an ounce as I write this. It has just broken below the 50-day moving average. Let’s see how it closes. As warned just few days ago too, this moving average acted as a big support level for the yellow metal.
Silver below $80.00 an ounce. Keep in mind, the big support level is around $72. We are in a big trading range from around $72-$90. Until it gets out of it, there isn’t really direction – I’d call it price discovery.
Copper – yesterday was 5th consecutive day below the 50-day moving average.
Why are metals lagging? Well, the big story was the dollar. Now, dollar catching a bid, and everyone is trying to take profits.
4. Have You Noticed This On The Indices…
If you follow price action, you may have noticed this on the stock market: over the past few weeks, each rally has been sold. Take a look at the chart yourself. At its core, this says bears are active/there’s a lot of profit taking.
Also, have you looked at VIX lately? It is trending higher. Tells me there’s some fear. It remains above 20, and that’s “market has a fever,” territory. Above 30 means high fever and above 40 means life support needed.
Beyond all of this: keep a watch on the 200-day moving average on the S&P 500. Getting close to it.
Hottest names/themes in town: fertilizer names.
5. Japan’s Bonds & Currency: The Slow-Moving Fault Line
This is still one of the most underreported stories in markets. Japan’s 10-year JGB is yielding 2.25%, and USD/JPY sits at 158.82.
For the Bank of Japan, over the past few year or so 160 has been like a big deal. So, worth watching.
Thing to know: any sharp yen strengthening and yields spiking creates forced unwinds in global risk assets. We saw a version of this in 2024. It may not crack today but zoom out — this fault line doesn’t need much of a trigger.
Oil shooting higher isn’t helping Japan either.