Home › Market News › Crude & Yen Futures, U.S. Debt, and the Future for Interest Rates
The Economic Calendar:
MONDAY: Fed Bostic Speech (7:00a CT), Chicago Fed National Activity Index (7:30a CT), S&P Global Composite PMI Flash (8:45a CT), Fed Goolsbee Speech (9:15a CT), Fed Kashkari Speech (12:00p CT)
TUESDAY: Redbook (7:55a CT), House Price Index (8:00a CT), S&P/Case-Shiller Home Price Index (8:00a CT), Consumer Confidence (9:00a CT), Richmond Fed Manufacturing Index (9:00a CT), 2-Year Note Auction (12:00p CT), Money Supply (12:00p CT)
WEDNESDAY: MBA Mortgage Applications (6:00a CT), Building Permits (7:00a CT), New Home Sales (9:00a CT), EIA Petroleum Status Report (9:30a CT), 5-Year Note Auction (12:00p CT)
THURSDAY: Jobless Claims (7:30a CT), Durable Goods (7:30a CT), GDP (7:30a CT), Real Consumer Spending (7:30a CT), Fed Collins Speech (8:10a CT), Fed Kugler Speech (8:10a CT), Fed Chair Powell Speech (8:20a CT), Fed Willams Speech (8:25a CT), Pending Home Sales (9:00a CT), EIA Natural Gas Report (9:30a CT), Fed Barr Speech (9:30a CT), Kansas Fed Manufacturing Index (10:00a CT), Janet Yellen Speech (10:15a CT), 7-Year Note Auction (12:00p CT), Fed Kashkari Speech (12:00p CT) Fed Balance Sheet (3:30p CT)
FRIDAY: Personal Consumption Expenditures (PCE) (7:30a CT), Retail Inventories (7:30a CT), Wholesale Inventories (7:30a CT), University of Michigan Consumer Sentiment (9:00a CT), Baker Hughes Rig Count (12:00p CT)
Key Events:
Stock index futures struggled to digest the Federal Reserve’s aggressive 50 basis point rate cut on the day of the decision but ultimately reacted positively the following day.
While there are short-term concerns and uncertainties, the market is approaching the fourth quarter, a period historically known for positive returns. It’s essential to analyze the data and avoid getting distracted by noise.
For the week, the S&P 500 added +1.1%, while the Nasdaq 100 was up by +1.49%
The Federal Reserve’s unexpected half-point rate cut sparked a rally in the market, particularly benefiting tech stocks like Nvidia and companies sensitive to interest rates, such as Home Depot.
For the week, the Financials, Energy, and Utilities sectors seemed to like the Fed rate cut the most. Defensive Consumer Staples, Real Estate, and Healthcare lagged.
The Federal Reserve finally gave in this week, cutting interest rates for the first time in four years. And they didn’t just go small; they went big, slashing rates by a whopping half-point.
It’s like they’re trying to preempt a recession before it even happens. Fed chairman Jerome Powell says, “We’re not taking any chances. We’re going to be proactive here.”
The Fed’s “dot plot” (basically a bunch of dots on a graph) shows that they’re predicting interest rates will be lower by the end of next year. It’s like they’re trying to make up for lost time. Do you remember when they were totally caught off guard by inflation last year?
In conclusion, the Fed is being super careful this time around. They’re not messing around. They’re committed to keeping the economy strong and willing to do whatever it takes to avoid a recession.
Additional Note:
A group of lawmakers has called for an even more aggressive rate cut, urging the Federal Reserve to implement a three-quarter percentage point reduction. Senators Elizabeth Warren, John Hickenlooper, and Sheldon Whitehouse argue that a more cautious approach could risk a recession and damage the labor market.
This highlights the growing pressure on the Fed to take decisive action to stimulate the economy.
Source: TradingView
The Fed Fund futures market expects the Fed to cut rates up to 50 basis points at the November meeting and an additional 25 basis points at the December meeting.
Source: CME FedWatch
Bank of Japan pauses on rate cuts but signals normalization (RISING RATES) will continue in the near future.
The Bank of Japan unanimously decided to keep its policy rate unchanged at 0.25%. Amid growing confidence in achieving its sustainable inflation target, the BoJ will closely watch the impact of FX movements on inflation.
The timing of the next hike remains uncertain, but we see a chance of a hike in December.
The hedge fund oil shorting party is winding down. After a wild ride of shorting oil futures, some are finally calling it quits when WTI crude bounced back above some key trendlines and $70 a barrel.
But don’t start thinking the bulls are completely out of the woods just yet. Despite the low oil inventories in Cushing, Oklahoma, and the slower-than-expected recovery from Hurricane Francine, the hedge funds still have plenty of ammunition to play with. They can use the rising U.S. budget deficit, the pathetic job market, and the crumbling Chinese economy as their reasons.
The shorts are finally getting bored and looking for their next shiny object to play with.
Source: TradingView
The Ticking Time Bomb Nobody Wants to Talk About – Imagine the federal debt as a giant, ticking time bomb. It’s sitting in plain sight, but somehow, our presidential candidates seem to be playing a game of “Let’s Pretend It Doesn’t Exist.”
Both candidates discuss economic policies, taxes, and spending, but when it comes to the mountain of debt piling up, they seem suddenly struck with selective mutism. Maybe they think if they ignore it, it’ll just go away.
As our favorite event-driven analyst, Kuppy, would say, “They just missed their target by a whopping $1 trillion. If this were a stock, it’d be down 40% before the market even opened.”
It’s time for someone to take this debt seriously before it’s too late. The canary in the coal mine is singing at the top of its lungs, and it’s time to pay attention.
Source: Bloomberg
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