I want to start off today with a chart that shows exactly why you shouldn’t trust most economists – at least those with ulterior motives. This chart also helps demonstrate the importance of crowd psychology across both the financial markets and the broader economy.
Article Category: Market Breadth
Interest rates have been the primary focus of investors lately, and for good reason. A glance at the chart of the 10-year Treasury note yield below shows that while rates have been steadily declining for nearly a year, that move accelerated sharply during the last two weeks.
Jerome Powell’s testimony last week offered no pushback against rate-cut expectations, and if anything, actually stoked the fire. Bets of a 50 basis point cut, as opposed to 25, rose, indicating the market shifted to an even more dovish stance.
Imagine you’re huddled down in a bunker, with the enemy approaching, and you only have nine bullets left. Do you fire a preemptive shot or two, hoping it will deter the enemy? Or do you save those bullets and wait patiently until you’re sure an attack is imminent? That’s the situation the Federal Reserve is facing right now.
It’s been a busy week so let’s jump right in. We’ll begin today with a brief look at where markets stand, get caught up to speed on the earnings front, and then examine recent trends in the latest economic data.