US MARKET INTELLIGENCE | MORNING BRIEFING

Research evidence excerpt

US MARKET INTELLIGENCE | MORNING BRIEFING

• US MACRO DATA: Initial/Continuing Jobless Claims and Philly Fed Business Outlook at 8.30am ET.

Leading Index at 10am ET. TIC Flow at 4pm ET.

• US EARNINGS: ASPI, KR, PAVS

• GLOBAL MACRO DATA: (UK) Average Weekly Earnings, ILO Unemployment Rate at 2am

ET. (UK) BoE at 7am ET. (Canada) Industrial Product Price at 8:30am ET. (Japan) Natl CPI at

7:30pm ET.

JPM MARKET INTEL EQUITY & MACRO NARRATIVE

There were a lot more questions than answers from Warsh’s press conference yesterday, but the two

biggest takeaways for stocks are: (i) a hawkish shift among the committee members as reflected by the dot

plot and inflation forecast; this drove 2Y yields 13bp higher yesterday, leading a broad sell-off with 1z to 2z

downward moves across multiple rate-sensitive sectors (see the chart below on the D1 basket reaction

following the 2PM Fed Statement); (ii) heightened policy uncertainties due to Warsh’s opposition to forward

guidance, changes in the statement structure, and the introduction of five new research topics for the Fed.

This led to higher rates volatility (MOVE Index added 5% today) and drove equity volatility higher (VIX +12%

today).

The Mag 7 underperformed the broader market yesterday despite its relatively lower sensitivity to yields.

While the group (JP1BMAG7) fell 2.5% today, half of this move came from the pre-Fed session, and the

group performed consistently with the broader market during the last two trading hours. Our trading desk

pointed out that they are seeing “consistent supply on the desk in the last few weeks as these names are

now seen as a source of funds.”

Overnight, we saw some rebound in broad stocks led by Tech and Mag 7. The US/Iran deal was finally

signed (Full text available from Axios).