Stocks whipsaw after FED hikes 50 BPS

In this week's Macro Insight I discussed...


Roller coaster last week as FOMC delivered the highly anticipated 50 bps hike but took 75bps off the table for June.

This was initially taken as a dovish surprise which triggered a vicious short covering rally as VIX dropped 5 points and SPX squeezed from 4150 to 4300 in short order.


With central banks all now in aggressive tightening mode (except BoJ and ECB) the big question remains, has inflation peaked yet and how far will they need to take rates up.


The move in bond yields has been wild this year. The total return in bonds hasn’t been this bad in decades and after initial curve flattening which took yield curves briefly inverted, we are now seeing some steeping.


The poster child for retail trading ARKK has been decimated and is tracking very closely the Dot-com bust analogue. MS quant research has approximated that all the gains made by retail since early 2020 have evaporated and we know they have also been the marginal buyer in recent months as real money liquidated.


SPX has it’s customary vol reset, short cover vanna rally after Powell press conference taking it up from 4150 to 4300.

That part had been quite easy to anticipate. It was however, the speed of the reversal down to new lows that was a bit surprising as the rally couldn’t even hold for 24 hours.


SPX is making new lows but VIX is struggling to spike much. This suggests that the dealers are not as short as we might think and some hedges may have been put spreads that gave vega to dealers reducing the need to buy vol on selloffs.


After a very brief pullback on FOMC, DXY is perched at highs whilst all other assets are getting liquidated. EUR and JPY have been major driver of USD strength lately, but GBP has recently been hit hard on UK economic concerns as well as CNH being allowed to slide to maintain competitiveness against Japan.


Most commodities remained weak even though uranium, oil, wheat, & natural gas seemed to benefit from the mid-week FOMC squeeze.

However, those gains have been all but given up as even nat gas has managed to find negative territory after being up around 20% last week.

Filmed on on Tuesday 10th May 2022.

Want to listen to our full discussion?

Sign up for a 14 day free trial with Options Insight today for access to our Members Dashboard where you’ll find a recording of the full call as well as my market report and top trades:

Please note, these recordings are taken from my weekly Macro Insight Trading Call. If you'd like to talk to me directly about any of the topics covered, join my Macro Insight community using the link below with a two week trial:

Members of our trading community find that being able to bounce their ideas and trading strategies off a professional with two decades of experience gives them clarity and confidence to grow their trading skills, and hopefully their account balance!


Macro Insight is an exclusive, members only community, hosted by veteran trader, Imran Lakha. When you join you will receive access to his weekly trading call, benefit from networking with other members, receive weekly marketing reports and be added to a private chat room which offers daily, realtime support and discussion. In the weekly MACRO INSIGHT trading call, veteran trader Imran Lakha, walks you through his macro cross-asset watchlist, discusses the main market moving narratives, shares his charts and the top trades that he is doing for his own portfolio. By joining a community of like-minded traders you can discuss trade ideas, increase your confidence and take advantage of opportunities in the market. This is a unique perspective into how a seasoned professional identifies opportunities, executes trades and manages risk. Every call ends with a live Q&A and an opportunity to share your ideas and receive coaching and guidance for your own trading.

DISCLAIMER Options Insight content is presented for educational purposes only. The information presented by Options Insight should NOT be construed as investment advice. Always consult a licensed investment professional before making important investment decisions. The opinions expressed by Options Insight are those of its founder Imran Lakha who shall NOT be liable for losses resulting from investment decisions based on information or viewpoints presented by Options Insight.

108 views0 comments