High Note

And so the holiday-shortened week comes to a close and it delivered everything that could have been reasonably expected of it.

We got the supply deluge from Treasury and that was digested with varying degrees of alacrity depending on the auction and depending on which internal you wanted to zero in on. All in all, it went ok.

The Fed minutes came and went and that delivered more fireworks than some folks were probably expecting. A dovish knee-jerk gave way to the ‘real’ization (get it?) that the still-tenuous outlook for inflation doesn’t trump the Fed’s desire to capitalize off the robust (in the post-crisis sense of the term) economic backdrop to squeeze in as many hikes as possible in order to replenish their counter-cyclical ammo ahead of the next downturn. All eyes now turn to March.

Real rates and stocks:

Any questions?

Nominally speaking:

This week was also defined by stocks’ inability to sustain an intraday rally with gains fading into the close amid waning risk appetite tied to jitters about inflation or, more to the point, jitters about the extent to which the Fed will be predisposed to hiking aggressively in an effort to head off an expected uptick in inflation catalyzed by Trump’s misguided decision to pile fiscal stimulus atop an economy operating at full employment.

That curse was snapped on Friday as Wall Street stormed ahead in the final hour to close the week on a high note:

Overall, stocks were up for the second straight week:

Speaking of Trump, he followed up on his weekend tweet storm with a series of comically ridiculous “suggestions” for how to go about preventing mass shootings. Basically, we’re now going to have Mr. Dirty Harry teaching social studies.

We also got the ECB minutes this week and the market took that generally in stride, probably thanks to what certainly seemed like a dovish lean.