feb 1  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom the three free puts time to put em to bed 1442 est1942 gmt bofas data analytics team is saying that the january fomc meeting and ensuing market reaction reinforced their view that the markets three free puts the fed put the buythedip put and bondequity diversification are failing and pose a big threat to risk assets powell dismissed the idea of a fed put and caused the most hawkish surprise in frontend rates since 2009 with this credit spreads suggest the fed is far from stepping in the bofa analysts write in a note our btd strategy is on track to record its first full miss since the covid shock and its worst performance since dec15 hurt by retreating retail investors options data shows they add that bonds remain absent when equities need them most wrecking multiasset portfolios unable to rely on these free puts any longer the bofa team recommends investors should look to buy their own the best of the bull has packed his bags 1353 est1853 est investors can say goodbye to the best of the bull market according to robert c doll chief investment officer at crossmark global investments in his latest deliberations this week doll says the abrupt speed of the recent equity market decline is a reflection of just how much speculative froth had built up in some parts of the market that said doll does not see a recession in the next year nor a bear market crossmark has a 4500 sp 500 yearend target which suggests just a modest down year this equates to a 56 spx decline for 2022 the spx is last off around 52 for the year doll believes a continued increase in corporate earnings should somewhat offset derating pressures as interest rates rise however doll sees some major implications for investors first he says that the buyandhold phase for risk assets is over this because equity volatility is likely to be meaningfully higher than the past 18 months with this he says investors should rein in their overall return expectations doll adds that in such a landscape that those seeking higher returns will need to be nimble making more frequent tactical moves finally emphasizes that although he believes that the bull markets most profitable phase is over since he is not expecting a recession or cyclical bear market this year he is not yet recommending investors underweight equities corporate debt supply in feb likely to approach record – bofa 1227 est1727 gmt corporate bond issuance is likely to approach record levels in february as companies rush to sell debt before the federal reserve hikes rates according to bank of america the bank is projecting investment grade corporate supply of 110 billion to 120 billion in february which would be near the monthly record of 120 billion sold in feb 2021 and above the average rate of 106 billion for the month “a year ago companies pulled issuance plans forward to get ahead of rising interest rates this year companies are doing the same to get ahead of the fed” bank of america analysts said in a report the fed last week said it is likely to hike interest rates in march and reaffirmed plans to end its bond purchases that month in what us central bank chief jerome powell pledged will be a sustained battle to tame inflation read more the largest six us banks and brokers issued the most debt in january since 2018 despite having lower issuance needs “the baton of issuing before the fed hikes will pass to industrials issuers in february and potentially march” bank of america said a risk to the forecast would be if market volatility reduces debt issuance as happened in the last week of january when the investment grade primary market “was effectively shut down” the bank said january supply nonetheless totaled 150 billion which was above the 138 billion issued in jan 2021 while the technology sector has been climbing in recent days from its january low reached on the 24th lindsey bell allys chief money  markets strategist writes that investors still aren’t sold on tech even with reduced valuations and among the best earnings results in the fourth quarter bell notes that inflationary pressures and higher interest rates were offering reasons to sell the rate sensitive sector on tuesday the sp 500 information technology index splrct is last roughly flat on the day slightly underperforming the sp 500 spx which is up around 015 at its lowest close in the recent selloff on jan 25th the sector had finished 146 below its dec 27 record closing high but bell suggests that the continued move lower could offer an interesting entry point for those without much tech exposure already even in a raising rate environment tech margins are expected to remain best in class and earnings growth is among the most reliable in the market bell writes and she notes that real interest rates are expected to remain negative throughout 2022 which should cushion the impact of the federal reserve rate hike cycle she didnt provide an estimate for just how many investors are without tech exposure but she advises them data arrived in triplicate on tuesday shuffling in fashionably late after the opening bell and bearing dreary news of a waning economic recovery activity at us factories lost steam in the first month of the year expanding at its slowest rate in over a year the institute for supply management ism purchasing managers index pmi uspmieci dropped 12 points to 576 just a hair above consensus and the lowest reading since november 2020 read more a pmi number above 50 signifies increased activity over the previous month a drop in the important new orders segment marked that components lowest point since june 2020 and the prices paid subindex  closely watched amid a hot inflation environment  surged 79 points to 761 among the cold comforts within the report the employment component edged higher and supplier deliveries held steady in a sign that supply chain pressures might have crested there were shortages of critical intermediate materials difficulties in transporting products and lack of direct labor on factory floors due to the covid19 omicron variant writes timothy fiore chair of isms manufacturing business survey committee remarks from the surveys respondents are littered with statements like massive interruptions to our production due to supplier covid19 problems we are still constrained by a lack of qualified labor and transportation restrictions and a lack of supplier manpower continue to create significant shortages that limit our production but some shoots of green popped up in survey participants comments strong backlog of orders coming into the new year and the supply chain crunch may be loosening a bit were among the more encouraging remarks ihs markit also released its take on january manufacturing pmi usmpmfeci delivering a print of 555 half a point above its advance flash reading taken midmonth the graphic below shows headline ism pmi along with several of the subcomponents next job openings unexpectedly inched up to 10926 million in december nudging back toward record territory as surging omicron infections kept workers home the labor departments job openings and labor turnover survey jolts usjolteci showed that overall labor market churn cooled off in the last month of 2021 with hires fires and quits all slowing down the quit rate  often seen as a proxy for consumer expectations as workers are less likely to walk away from a gig in times of economic uncertainty  dipped to 29 of the workforce from 3 the layoffs rate hit an historic low in december lowest since the series began in 2000 elise gould senior economist at the economic policy institute says in a series of chained tweets job openings increased in accommodations and food services as well as state and local government education two sectors still suffering some of the largest job shortfalls since feb 2020 finally expenditures on construction projects ustcnseci inched 02 higher in december according to the commerce department a 40basispoint deceleration from the prior month and well below the 06 analysts expected read more residential construction again did the heavy lifting rising 11  the strongest reading since september  while a 16 drop in publicly funded projects held the overall gain in check potential homebuyers mad pandemicdriven dash for the suburbs has significantly depleted supply of homes on the market a phenomenon which as given a solid boost to homebuilders since shortly after the onset of the health crisis but some analysts see that trend running out of gas this year we expect residential construction outlays to register only modest gains in 2022 says nancy vanden houten lead us economist at oxford economics wall street seemed to be teasing market watchers again with its indecision flipping between red and green throughout morning trading energy spny and transports djt are the days clear winners as the noon hour approaches fed could lean more on balance sheet reduction as yield curve flattens 1030 est1530 gmt dramatic flattening in the us treasury yield curve has increased concerns that the federal reserve could go too far when it begins raising rates in a bid to tackle unabated inflation and possibly tip the us economy into recession the us central bank could however lean more on balance sheet reduction to reduce the impact of rate hikes on the yield curve the closely watched twoyear 10year yield curve reached 57 basis points on monday the smallest yield gap since nov 2020 and was last at 62 basis points it has flattened from 92 basis points in early jan and 130 basis points in oct while the curve remains far from an inversion which is viewed as an indicator that a recession is likely in the next onetotwo years it’s rapid flattening reflects increasing fears that the us central bank could make a policy error shorterdated treasury yields have surged and stock markets have been volatile as fed officials including chair jerome powell signal that they will take a more aggressive stance to stamp out persistent price pressures deutsche bank analyst steven zeng said that the fed could shrink its balance sheet at a faster pace based on the bank’s projections that excess liquidity particularly in the fed’s reverse repurchase agreement facility could stay high for another two years “the implication is that the fed could aggressively use balance sheet unwind as a policy tool to mitigate excessive flattening of the curve resulting from faster pace of rate hikes” zeng said in a report money market investors lent the fed 165 trillion in the facility on monday as they continued to struggle with excess cash and a dearth of safe shortterm assets fed policymakers on monday said theyll raise interest rates in march but spoke cautiously about what might follow signaling a desire to keep options open in the face of an uncertain outlook for inflation and a pandemic still ongoing read more just how much french ma is on hold 1005 est1505 gmt were less than 100 days away from the french presidential election which is typically seen as the worst possible time to announce a big ma deal involving a french blue chip the idea being that with the campaign cruising towards full speed many candidates for the elysee palace would happily jump on any scent of controversy to make the failure of a deal a key proposal in their platform in that context many analysts such as at barclays doubt frances leading supermarket groups carrefour and auchan would announce a deal should one be ready before the french head to the voting polls we believe that the possibility of significant layoffs resulting from any potential deal and the presence of financial investors including private equity firms will likely mean any transaction would be subject to close scrutiny by the french government barclays analysts argued in a note we cant rule out that the latter could block any potential deal as was the case last year when couchetard contemplated an acquisition of carrefour they add at bernstein the research team notes that there would be clear antitrust issues given both groups large market shares and commented that competition authorities would have fun reviewing a potential merger how much potential gallic ma is on hold is anyones guess but its likely that now wouldnt be the right time to consolidate the telecom sector or announce a paneuropean deal involving a french bank us stocks try to put january behind them 0939 est1439 gmt major us indexes are little changed on tuesday in the wake of gains from the past two sessions as focus turned to data on manufacturing and job openings nevertheless there is early strength in transports the dow transports djt are jumping nearly 3 underpinned by a surge in ups upsn this after the sp 500 spx just had its biggest monthly drop since march 2020 and its worst start to the year since january 2009 read more meanwhile philadelphia fed president patrick harker said it may be appropriate for the federal reserve to raise interest rates four times this year and to move more aggressively if the factors leading to higher inflation such as supply chain issues are not mitigated read more us january ism manufacturing pmi is due at 1000 am est the expectation calls for a reading of 575 vs 587 last month prices paid is expected at 681 vs 682 in december here is where markets stand early on tuesday sp 500 and the test of a warrior 0900 est1400 gmt the sp 500 index spx is quickly nearing an area on the charts where it must prove its mettle to add confidence that its sudden strength is more than just a countertrend bounce last thursday the spx ended down 98 from its january 3 record close with this the benchmark index closed at its most oversold level on a daily basis since latefebruary 2020 since then it has mounted an impressive bounce of more than 4 and reclaimed its 200day moving average dma the daily rsi plunged to 16 last thursday suggesting the market was especially ripe for a bounce now with the markets rally it has recovered to the 50 area however it is facing the resistance line from its early november peak meanwhile despite reclaiming the 200dma the 100dma which acted as more direct support throughout much of the 20202022 advance is still resistance at around 4570 additionally the spxs january 10 low at 458224 appears to be another key hurdle if the spx can reclaim this level coupled with the rsi regaining enough strength to move above the 7000 overbought threshold it could add credence to the view that the spx found an important low last week however if the spx rolls under resistance and closes back below the 200dma which ended monday around 4435 it can suggest potential for new lows below 422262 in that event traders will be watching for the 236 fibonacci retracement of the 20202022 advance at 419870 to potentially hold again while the rsi forms a higher low since early 2020 more enduring spx lows have been accompanied by a bullish momentum convergence for tuesdays live markets posts prior to 0900 est1400 gmt  click here read more terence gabriel is a reuters market analyst the views expressed are his own