Market Notebook

Discussion – 

PRICE ACTION:
Equity prices, as measured by the ticker SPY, closed lower last week, while bond prices, as measured by the ticker BND, closed higher.

SPY    -4.14%
BND    +0.93%

TECHNICAL ANALYSIS:
SPY price failed to overcome overhead resistance and thus could be considered in price consolidation.

BND price has broken higher out of consolidation, suggesting the beginning of a new upward trend.

SENTIMENT:
Market participants did not see what they wanted to see in the economic data, and they did not hear what they wanted to hear from the Federal Reserve. As such, equity prices moved sharply lower last week while trading was reminiscent of a child’s tantrum.

ECONOMY AND FUNDAMENTALS:
Throughout the tightening cycle, jobless claims have never indicated a recession by our measure. We will continue to monitor weekly jobless claims closely.

The 12-month trimmed mean PCE is below the long-term average, meaning the Federal Reserve is already within a window within which it could cut interest rates at any time.

The first rate cut will likely happen over the next few months. Market participants should be on the lookout for recessionary conditions following the first rate cut after a tightening cycle. To avoid recessionary conditions, the Federal Reserve will have to get the timing of rate cuts exactly correct. Thus far, the Federal Reserve has managed the economic cycle well.

All the best during the week ahead!

Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.