As we know, the Fed cut rates for the first time in over 4 years. It was larger than I had expected at 50bps. Since then, however, the market has bounced higher. I mentioned this would happen in a "buy the rumor, sell the news" type of event. The market aggressively priced in a rate cut, when the Fed actually did it, they readjusted their bets and pushed rates higher. Take a look below (cut rates on highlighted portion): 
Nothing sprints without a break. We have been in a downtrend since Spring. I believe we have a little higher to go before testing some resistance levels and then bouncing back down.
The Fed has cut rates for the first time in years. This is the start of a regime change. We went from raising rates to pausing to now cutting. Once the market works its wiggles out, we will resume our descent into lower interest rates.
Last week, the market was expecting about 75bps more of cuts to finish the year. Today, Fed Chairman Powell spoke and indicated that we will see about 50bps of cuts in Q4. There are 2 more Fed meetings to be had this year so we can expect a quarter point cut at each.
Powell expressed the importance of analyzing data and the Fed not being on any preset course. We have a bunch of labor data set for this week with the unemployment rate out on Friday. This will be a mover for rates depending on where the numbers come with respect to analyst expectations.
Here is what's in store for this week
Monday
- Fed Governor Bowman Speaks
- Chicago Business Barometer
- Fed Chair Powell Speaks
Tuesday
- S&P Final US Manufacturing PMI
- ISM Manufacturing
- Construction Spending
- Job Openings
- Fed Governor Cook Speaks
- Fed Presidents Bostic, Collins, and Barkin On a Joint Panel on Tech-Enabled Disruption
- Auto Sales
Wednesday
- ADP Employment
- Cleveland Fed President Hammack Gives Welcoming Remarks
- St Louis Fed President Musalem Gives Opening Remarks
- Fed Governor Bowman Speaks
- Richmond Fed President Barkin Speaks
Thursday
- Initial Jobless Claims
- S&P Final US Services PMI
- ISM Services
- Factory Orders
- Minneapolis Fed President Kashkari Moderates Discussion With Atlanta Fed President Bostic
Friday
- US Nonfarm Payroll
- US Unemployment Rate
- US Hourly Wages
- Hourly Wages YoY
- New York Fed President Williams Gives Opening Remarks
Here is a list of current Fed members and their Dovish/Hawkish stances (Dove = cut rates, Hawk = keep elevated). As you can see, we hear from more of the hawkish Fed members this week. 
That's it for this week! I hope you enjoyed this issue.
Comments(0)