Monica Kingsley
Monicakingsley
S&P 500 wavered in the triple witching open (allowing for early intraday short calls), and then the retracement higher almost all the way till the close, ruled – except for the action before the very closing bell. What could be behind that, and does it carry implications for stock prices ahead?
It‘s one more day of digesting not just the 50bp cut catching most off guard, but also about the rate cut path (full dot plot till end of 2025) ahead. Just as I warned the preceding weekend about bond prices being vulnerable to decline, so it (the degree of rate cutting expectations) is manifesting in the not 250bp but merely 200bp till Dec 2025 expectations now.
Also as regards Nov, there is almost a 50% chance of 50bp cut, but I‘m not jumping the gun to predict it now as done deal, but it sounds more likely than 25bp. Powell‘s focus will turn increasingly to the job market – after the recent massive adjustments on the job creation side for practically all of 2024, I think the next couple of weeks as a minimum would feature good news on the unemployment claims front (meaning less than 250K initial claims) as we‘re entering a seasonally stronger few months, and consumer discretionaries chart has also a message to say. Still, markets will demand another 50bp cut in Nov..
Yield curve uninversion and recession? No, not this year, I still don‘t think so.
Let‘s have a look at yields and what the put to call ratio is saying about risk taking in general. Yes, the yen looks tame at the moment, no danger to the carry trade, it had weathered the cut very well.
All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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