Oil Price Move Matters More Than CPI: 3-Minutes MLIV

Summary

Mark Cudmore argues that oil and Middle East developments have overtaken CPI as the key driver of bond yields and market volatility. He notes that a $5 drop in oil would likely prevent the US 10-year yield from hitting 5%. He is structurally bullish on stocks for next year, expecting strong growth to support equities despite higher yields.

• Oil and Middle East news are now the dominant market drivers, not CPI.
• A $5 oil price drop would likely keep the US 10-year yield below 5%.
• Market volatility is becoming self-reinforcing, warranting a long volatility stance.
• The Fed meeting is expected to set the next macro narrative, but the market is divided on a hike.
• CPI remains a secondary risk for markets.
• Mark Cudmore is structurally bullish on stocks over the next year.
• Higher yields reflect strong growth and are not expected to derail equities soon.