KG: Treasury Volatility Chips into SPX, Fed Minutes Non-Mover & Crude Lingers Near $90

We've got a ten year note auction as well $39 billion. Let's get out to Kevin Green who joins me now. Good morning. KG just give us a quick market thought after the back of these records we set yesterday. We're coming off a bit here this morning. We are seeing a back ink there's some profit taking happening especially when you're looking at the logy sector maybe some headlines hitting some of the the stocks that have perf relatively well over the last week, week and a half or so, and we have yields moving a little bit higher. Now. It is actually a little bit lower from the open. So that's actually a good sign. But we are seeing elevated yields. And unfortunif we continue to see volatility within the bond market space well as high yield credit continuing to kind of move to the upside, when you're looking at those credit sp meaning that it less illiquid, if you will.ess That's where we can see a little bit of volatility. it's a pullback for now. And I think if you're kind of looking at the levels fo the market that I'm kind of focusing on here, we already broke through that 7800 level. Twas kind of a key area of support yesterday. We actually opened below that level and we p down to the downside. You're looking at 7740, and that's going to be somethin you want to be able to hold. And I will say, Sam, you are starting to see flows in the 7715 puts. So there is actually flows below that level that we have on the chart. Let's see if that actually does kind of take place. And in fact, we actually have a pretty decent hammer candle that is forming on the 15 minute chart here. Maybe some buyers will try to step reclaim of the 7800 level, looking at 7830, but not a lot on the economiendar. But as you talked about, the ten year Treasury auction, I think is going to be a very big deal today. We did see a very strong ten year auction last month, ablt I've ever seen. But we have seen some weakness when it comes to the s duration, like the five year auction that had one of the lowest foreign buying demand thve seen also in a very long time. If that does kind of translate over to th year, that's what we could see additional vol within the market. Okay. So we're going to be watching out for that ten year note auction. As I mentioned $39 billion 1 p.m. eastern. Do you think this could present a sort of competition capital with respect to equities and corporate credit markets. Well it could I think what the real test is going to be. Not only the deale take down ahat's left after everybody put in their bids, but also, once again, those indirects that foreign demand that's going to be out there. I think those are the t narratives that everybody is a little bit cautious about, concerned about right now. And yes, we focused on the inflation, but at some point in time, yields will get high enough wh institutions feel like there's a decent risk reward ratio. We just don't know if we are theree looking at the ten year rate futures contract, this is showing y We have been in this kind of flagging formation. We're still making higher lows as well as higher highs in a sense. But we are starting to seetum weighing a little bit. That maxi at the bottom. It appears that it wants to of l cross over. Sam. If we do stay at these levels fonext 4 to 5 trading sessions, that may give you some confidence that maybe we pack back down to that 4.5.1 percent level. That would be conducive for equities moving higher if we break and move even higher than where we are at right now, yo looking at 5.5% as the next area where the market's going to be focused on. So unfortunately, a little bit of Treasury vol. But a pullback in the equities this morning is reI don't think. Right. Okay. So an hour later then we have the FOMC minutes. I mean you know what are we going to be looking out for in that. Because we've kind of got the memo on the forward guidance or lack of. I mean, we've been hearing from some of these fed members t seemingly want to be patient about what to do next. It's been interesting from my convers I've been having and some of the trader talk I've been hearing here that people are sayink, they wouldn't be surprised. Even with the current market pricing of another one this year they were one and done. Yes, rare, but it's happened before, particularly because they talked about t out that dose of accommodation. Not saying it will, but it's just intereste chatter. What are you going to be looking out for in those minutes. I think the minutes are going to be that big of a headline mover. And that's just because w already seen around 80% of the fed members speaking. So we couldrobably put out their own plots and their own guidance within the summary of economic projections and their guidance moving forward. I think 25 basis points is still being priced in fo the remainder of the year. I think it's a coin flip if it's going to be October or if it's going to be December, I think that's going to be the make or break. But I think we have. I haven't seen fed minutes really move the market aggressiv a very long time. I would be surprised if this one would do the same. Here would be a big market catalyst. I think the auctions a bigger, bigger deal than the fed minutes. Yeah. Okay. So we'll be watching out for that. Obviously we've mortgage apps out this morning. Interesting. Down 4.2% last week. Purchases two Refis down 7.5%. The average 30. Fixed rate 7.5%. That's up from 7.3. So obviousping an eye on that. But I did want to ask you about oil because while we are see perhaps some profit taking today off the back of this rally, we've s in recent sessions. KG I mean, we did start to see that so playing tgh in the overnight session off the back of reports that Iran is accelerating some of its strikes in the Strait of Hormuz. I'm seeing that the Saudis have intercepted thi launched ballistic missile north of Riyadh, the Houthis attacking an airport. What is driving some of that this morning asfar, we're still sub 90 bucks on WTI. So obviously the infraste risk within Saudi Arabia I think is pushing prices higher. Notch for crude oil this morning which is actually about to go flat here. But you're look at the bcts. So heating oil or diesel if you will up about 3.6%. A we're looking at gasoline that's up about 2.5%. Whileude p about 0.5%. So there's a little bita split between byproducts as well as the input, if you will, or the fee. And th means that crack spreads are actually moving higher today. And that has been e markets. I think there's some geopolitical risk taking place. And Sam, yo kind of bringing it up. There's there's been 12 ships that have alr been hit in the last seven days. So it is escalating. But we have theU coming out in the next couple of hours, and they're going to talk about them products and see where they land on that strategy moving forward here.ight now, technically speaking, oil is holding up exactly where the technical trends are, saying should see a little bit of a relief bounce to the upside. , k. Things stabilizing today. And we do have the Department oferge bott