Market Signal

Three independent tripwires crossed on the September 8 close and they all point the same way: the market is starting to price a hawkish Federal Reserve rather than an easing one. The yen gauge $FXY rose 1.52 percent on the day and 4.13 percent over the week to an RSI of 72.6, the shape a carry unwind makes when funding costs reprice. Breadth thinned underneath a quiet index: the equal-weight $RSP fell 1.04 percent against the S&P 500 tracker $SPY at -0.55 percent, leaving the equal-weight measure at RSI 42.5 and in a weak downtrend while the cap-weighted index still reads strong-up. And the Brent tracker $BNO closed 57.73, crossing above the 57 level that the August 18 bond-fear call had named as its invalidation, after a 23.01 percent run over thirty days that also carried the oil tracker $USO up 23.78 percent. Rising energy into a hawkish repricing is the uncomfortable combination, because it argues the inflation input is going the wrong way just as the policy window opens. The Producer Price Index lands Thursday and the Consumer Price Index Friday, with the Federal Reserve meeting the following week. None of this is a directional call on equities; it is the observation that the funding, breadth and energy wires stopped disagreeing.