In Monday’s morning note we featured data showing that fed funds futures were, in the face of intense global angst, still pricing in a zero chance that the Fed will not raise its benchmark rate at its upcoming meeting.

Well, as of yesterday, futures actually did price in a global-angst-induced 10% chance of no hike this month. 

As of this morning, however, we’re back to zero odds.

I suspect the following bullet points from Fed Governor James Bullard’s discussion in a virtual event this morning has something to do with today’s move back to more hawkish pricing:

• “This situation calls for rapid withdrawal of policy accommodation in order to preserve the best chance for a long and durable expansion”
• Says U.S. economy doing better in terms of inflation-adjusted consumption than it would have been without the pandemic, pointing to the trend line drawn from 2011
• Real economy has more than fully recovered from the pandemic recession
• “The FOMC must now follow through with policy rate increases and balance sheet runoff or risk squandering policy credibility”
• “The FOMC may have to move more aggressively going forward if inflation increases or does not moderate as much as expected”
• Says Fed policy settings are “putting upward pressure on inflation, exacerbating the inflation problem”
• Notes developments in the Russia-Ukraine war will have to be monitored closely but will likely impact Europe more directly than the U.S. He says global energy markets will be impacted over the short-to-medium term, which may lead to increased U.S. production of oil and natural gas
• Bullard says inflation “has surprised substantially to the upside”

We’ll see if Fed Chair Jerome Powell attempts to walk any of this back during his two-day talk with Congress (occurring as I type). Although, while he may walk back Bullard’s aggressive (relative to what we’re used to from the Fed) tone, we don’t expect him to leave any ambiguity with regard to a rate hike this month (one’s coming). The market’s attention will be on clues as to whether it’ll be .25% or .50%. Strong hints at the former will likely see stocks higher today…

We’ll keep this morning’s note brief. I’ll circle back a little later with a charting update. We’re scoring our equity market conditions index  (a monthly exercise) today as well; I’ll share those findings in tomorrow’s morning note.

Asian equities struggled overnight, with 12 of the 16 markets we track closing lower.

Europe’s catching a bit of a bid this morning, with 12 of the 19 bourses we follow in the green as I type.

US equities are (save for the Nasdaq) mostly higher to start the session: Dow up 225 points (0.68%), SP500 up 0.57%, SP500 Equal Weight up 0.91%, Nasdaq 100 down 0.30%, Nasdaq Comp down 0.28%, Russell 2000 up 1.04%.

The VIX sits at 32.64, down 2.04%.

Oil futures are up 4.71%, gold’s down 0.56%, silver’s down 1.19%, copper futures are up 0.95% and the ag complex (DBA) is up 0.61%.

The 10-year treasury is down (yield up) and the dollar is up 0.18%.

Among our 38 core positions (excluding cash and short-term bond ETF), 27 — led by PARA (formerly Viacom), energy stocks, metals miners, Nokia and base metals futures — are in the green so far this morning. The losers are being led lower by solar stocks, carbon credits, silver, gold and wind stocks.