Equity prices made another early run towards a new record high before easing off, while treasuries underwent a bear-flattening with front-end yields adjusting slightly higher on a significantly higher import price print (0.7% MoM vs 0.1% expected).

We have little in the day of data until Wednesday of next week with Nvidia earnings, where options are implying a +/- 8% move for the stock, just beneath its 2yr average of +/- 8.4% and +10.9% in February. The 8% implied move translates to a ~0.4% impact on the SPX given the chip giant’s outsized weight in the SPX not to mention sentiment spillover to other related stocks in the index.

Along with the import price miss, an expected rebound in oil prices into the summer driving months is likely going to keep CPI pressures elevated into August, though inflation traders remain as confident as ever that CPI will settle <2.5% by the end of the year.

The unshakeable confidence in inflation and lack of economic risks are allowing markets to focus singularly on where interest rates are going, leading to treasury yields and stock prices to be moving in perfect inverse correlation since mid December. Said another way, both equity and bond prices are moving together in a perfect Goldilocks scenario, ignoring signs (once again) for any tail risks that could come from a deeper economic slowdown, stubborn inflation, or valuation correction.

Not much to note on the crypto side with BTC holding against the recent highs on muted activity. However, Coinbase stock fell -9% on the session, a notable break from Bitcoin prices as investors are beginning to worry about rising competition in the regulated field from the likes of CME entering into spot trading. The entry of TradFi certainly brings much needed inflows but will certainly give rise to new competition as well. How will the crypto landscape look a year or two from now? We certainly live in interesting times.

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