Yes, It's All About The Fed, But Just For The Moment

Just to bring home how this moment is all about the Fed, and the prospects for a rate cut, take a look at our one-minute futures charts (left to right, top to bottom) for the Nasdaq 100, the dollar, the VIX (SP500 volatility index), bonds, smallcap stocks and gold on news that inflation rose by 01% (year-on-year [notably higher month-on-month]) higher than expected, and weekly jobless claims came in at 209k, vs 220k expected: 

click to enlarge...


So, why would ("inflation hedge") gold plunge on an unexpected rise (albeit modest [save for month-on-month]) in inflation, and an inflationarily-strong jobs market? Good question: It's simply because the gold trade, for the moment, is all about the lack of competition it faces in an uber-low interest rate environment, and what an uber-low interest rate environment says about general conditions (gold's ultimate safe-haven status).

Fed Chair Powel will continue his testimony before Congress today; no doubt he'll take every opportunity to reaffirm his committee's willingness to cut rates, which will likely have traders reversing the hits illustrated above.

Question being, how soon after Powell leaves the stage (so to speak) will traders begin focusing on the three weeks of earnings announcements (and projections!) that will precede the Fed's actual interest rate cut announcement? Hmm....

For the time being, just expect volatility...