Closing Thoughts for the Week

If there are any lingering concerns about the omicron variant, they sure aren’t showing up in the financial markets. Friday’s November inflation report came in about as expected, which could be a signal that year-over-year rates might be peaking. The topic of inflation naturally leads into a discussion of next week’s Fed quarterly meeting and whether or not any of the calculus has changed.

Things are starting to get a little ugly in the world of risk assets. Whether this ultimately ends up being the bottom or just a stop along the way to a further rise in volatility, now is the time to keep your dry powder ready to deploy. I’m going to keep beating the drum about the upcoming debt ceiling deadline.

What was supposed to be a quiet holiday week has turned into anything but. There wasn’t the big move in high yield credit spreads that you might expect to see in a bigger market blow off. What could become the  more interesting storyline is how the Fed responds to the new omicron strain. My guess is that the full taper is off the table now.