The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Less hiking?
Overnight trading was quiet and overseas markets didn’t do much either. Our yields started up and climbed further until a quote from Fed Reserve Bank of New York President, John Williams, hit the newswires. He said one more hike may be needed this year. Yields fell, especially the 2-year. Stocks turned and attempted to climb back to unch’d, though not getting there.
While more equity-focused investors are keeping an eye on the yield curve, today’s comments by John Williams brought a little relief. Perhaps it was more psychological than fundamental for the stock market. It didn’t move the S&P much.
It did move the front end of the yield curve and the Fed Funds futures market though. Fed Funds futures now price an October hike with 52% probability, down significantly from 70% yesterday. The whole Fed Funds curve fell 4-5 bips today, an interesting shift lower in the entire anticipated hiking cycle.
Treasuries and Fed Funds took a break from their upward march. Those markets have a lot of movement under their belts already perhaps they overshot. Perhaps they need to digest what they’ve done. Perhaps they just need to slow everything down.
The stock market is watching of course, but not obsessively. If rates keep climbing, it will.
See you tomorrow.
-Mike
Visdom Market Commentary
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