The first rate cut in – what – 8 or 10 years just 6 weeks ago, saw the SP 500 and the high-yield credit markets sell off sharply.<\/p>\n
The selling continued through the first half of August as the SP 500 tested 2,820 – 2,825 several times, and the long-end of the Treasury curve rallied sharply.<\/p>\n
The 10-year Treasury yield approached the 2012 – 2016 lows between 1.35% – 1.40% the first week of September.<\/p>\n
That’s history – what is expected Wednesday, September 18th, 2019 ?\u00a0<\/strong><\/em><\/p>\n Expect the FOMC to reduce the fed funds rate 25 bp’s to a range of 1.75% – 2%. What is remarkable is that the probability of a 25 bp’s rate cut – per the CME fed funds futures – is now roughly 50%, even though it was over 90% a week ago.<\/p>\n A steepening of the yield curve would help Financials and continue to push the sector higher. As the 10-year Treasury widened last week from 1.55% yield to 1.90%, the Financial sector rallied sharply right alongside the yield increase.<\/p>\n While everyone will watch the SP 500 and the US stock market, the corporate high-yield ETF’s response to a rate cut such as the HYG, JNK and SHYG will be monitored. All the ETF’s are still below their June ’19 highs although not by much. (Long all three ETF’s).<\/p>\n Economic data has been coming in stronger-than-expected the last few weeks. Jobless claims from last week are again near 200,000, multi-decade lows.<\/p>\n I wonder if we get 25 and done ?<\/p>\n Just thinking out loud – these are not predictions.<\/p>\n Thanks for reading.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The first rate cut in – what – 8 or 10 years just 6 weeks ago, saw the SP 500…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[190,50,226,163,40,39],"tags":[],"class_list":["post-9322","post","type-post","status-publish","format-standard","hentry","category-10-year-treasury-yield","category-bond-markets","category-credit-markets","category-fomc-meeting","category-hyg","category-jnk"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9322"}],"version-history":[{"count":1,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9322\/revisions"}],"predecessor-version":[{"id":9323,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/9322\/revisions\/9323"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}