A boxed-in Fed and war-driven inflation push rates up and leave only energy standing
With the 2-year yield up 29bp since mid-February and the Fed unable to ease, equity valuations now lean on cash flow the business can deliver soon, not on the hope of cheaper money.
The Fed held rates as the Iran conflict weighs on the economy, and the tape sold off almost everywhere: only 1 of 12 sectors rose. Energy gained 0.46% while Materials fell 2.90% and Consumer Staples 2.67%.
Since the last briefing
Yesterday we leaned 55/45 toward Stagflation Squeeze and said the broad rally was unconfirmed until the Fed spoke. The Fed spoke and held.
What drove the session and how it transmitted, the exposure table by persistence grade, where the committee disagreed, its verdict and weighting, and the falsifiers that would prove it wrong.