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Stocks opened higher and traded sideways for the rest of the day. Just an uneventful day. The reason, I think, was just due to implied volatility resetting after the VIX 1Day climbed to and closed at 16 on Friday. The VIX 1Day closed on Friday at the same level as Thursday, the day before the jobs report.

When the VIX 1 day opened under 10 today, that implied volatility reset helped stocks rally. This probably explains why there wasn’t much movement the rest of the day, with the S&P 500 just trading sideways.

Oil traded higher on the day by more than 2% and avoided breaking the downtrend at $70.50. If oil is going to head higher, it needs to bounce here after a reasonably significant pullback since mid-January.

Copper has recently broken out, moving sharply higher and back to $4.70. If a double bottom formed in copper, it is now at the neckline; then a breakout could send the metal back to and over $5. It certainly will not be inflation-friendly.

Given the move higher in copper and oil today, 2-year inflation swaps went higher as well, as they managed to reach 2.67%. This places the swap very close to making a new local high and potentially triggering a significant breakout.

So despite this, I’m sure that when Powell speaks before Congress over the next two days, he will say that inflation expectations are well anchored. Maybe it depends on which inflation expectations one is looking at because 2-year and 5-year swaps would leave one feeling a bit uneasy about whether those inflation expectations will remain well anchored.

I guess time will only tell. Hopefully, there will be more to talk about tomorrow.

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