Pre-Election March seasonality suggests a low early next week

The near-term pattern failed to show much deterioration, despite the uber-hawkishness of Powell’s comments Tuesday. While SPX did pullback sharply, this was a “drop in the bucket” compared to the rally which had carried SPX 150 points higher since Thursday’s lows.

Erasing half of this prior bounce is insufficient to think trends are turning bearish. However, sentiment is clearly turning more and more negative, in my view. Investors seem to be hyper focused on the economy more than ever, despite the futility of being able to successfully use this data to forecast price action.

Rates showed some meaningful evidence of stalling out despite Powell’s commentary having been called quite hawkish. Momentum has begun to wane on long-term Treasury yields and yields are 10-12bps lower than last week, despite Treasury sentiment having worsened. I expect rates to peak out next week and begin turning back lower.

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