Last week as the Iran conflict escalated US markets closed lower for the fourth consecutive week. The S&P 500 ended the week down ~2% breaking below its 200d ma for the first time since reclaiming it last May after the tariff reversal. Friday was a record volume day with >5B shares and ~$317B of notional value trading during the session. The equity and oil volatility has captured a lot of attention but arguably the most notable change last week was the sharp move higher in global yields. Most of the major central banks held their rate decisions last week which had a hawkish tilt. Chair Powell acknowledged the uncertainty shifting to a wait and see approach, but BOE Governor Carney put it most bluntly saying- “Whatever happens, our job is to make sure inflation gets back to its 2% target.” 2yr Gilt yields were up ~50bps for the week pulling Treasury yields higher as markets priced out the prospect for any rate cuts in the US and had started to price in multiple rate hikes across Europe. Ahead of the FOMC meeting on Wednesday the ICE BofA MOVE index, a measure of Treasury volatility, was ~80, it ended the week just under 110, nearly doubling since the start of the year.

Today is the 6yr anniversary of the Covid low. I distinctly remember the date as it was the first day the floor shutdown and it also happened to be my mom’s b-day - Happy Birthday Mom. That morning the Federal Reserve pulled out its form of a bazooka announcing an unlimited amount of QE including the purchases of agency/mortgage-backed securities and putting in place credit facilities to backstop the corporate credit markets. It was a Monday morning following a triple witch expiration with futures trading sharply lower before the Fed announcement which caused a significant reversal, but major indices still ended the session lower. At the lows that Monday the S&P 500 had fallen ~35% from its high in just over 20 trading days making it the fastest 20% decline from an all-time high in history and ultimately the shortest bear market as well with the index surging >20% from the low in 10 trading sessions, the rest is history as they say.