Markets remain under pressure

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Published Date 9/20/2024

No significant news this morning, markets still digesting what the Fed means using “recalibration” as Powell mentioned eight times at his press conference Wednesday to adjust from inflation to focusing on the employment sector. “This recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we begin the process of moving forward a more neutral stance.” Financial markets are still not sure what it means. Yesterday weekly jobless claims expected at 230K fell to 219K down 12K from the prior week. At the end of the day Wednesday stock indexes were lower, yesterday a strong improvement to new record highs, DJIA +522, NASDAQ +441; S&P +95; this morning no follow—though the indexes little changed at 8:30 am ET.

The 50 bps cut is unusual for the Fed, maybe it was what some are calling a make-up move by not cutting 25 bps at the July meeting. The present outlook is more cuts this year and in 2025; this year’s outlook is within reality, next year is too far out to take seriously now. In the rapidly moving CMEs FedWatch futures markets traders are pricing in a more aggressive pace that would entail a quarter-point cut in November but back to a half-point move in December, the margin in FedWatch however is thin and shouldn’t be taken seriously, there is a lot of ground to cover between now and November 7th.

At 9:30 am the DJIA opened -72, NASDAQ -14, S&P -8. 10 year 3.75% +4 bps. FNMA 5.5 30 year coupon at 9:30 am -4 bps from yesterday’s close and +6 bps from 9:30 am yesterday.

There isn’t anything on the calendar today, according to the schedule Philadelphia Fed’s Harker at 2 pm.

Source: TBWS

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