Market Notebook

Discussion – 

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

SPY    +0.28%
BND    -0.52%

TECHNICAL ANALYSIS:
SPY price appears to have established an upward trend; however, last week’s price action failed to convincingly break out above recent highs. SPY needs to break out higher or risk being classified as in consolidation.

BND price appears to be trending upward within a much wider area of consolidation. One could say that BND price is trending higher over the short to medium-term within a long-term area consolidation.

SENTIMENT:
Market participants appeared torn last week as rate cuts loom, given a backdrop of challenging economic conditions.

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.