Lanceljx
09-17 13:05
C for me: long-term Treasury yields.

I agree investors need to look beneath headline numbers. NFP can look strong while revisions, participation, hiring breadth and duration of unemployment tell a more nuanced story. August payrolls rebounded strongly, but longer-term unemployment remains a concern.

Right now I am watching long yields most closely. The 10Y has already tested 5%, while fiscal deficits, Treasury supply and inflation expectations can keep long-term borrowing costs elevated independently of the Fed's next move.

That matters directly for equity valuations, mortgages and corporate financing. The Fed just hiked to 3.75%-4.00% and its projections remain hawkish, but the bond market may tell us more about financial conditions than simply guessing the next FOMC decision.

So yes, NFP, VIX and Fed decisions matter, but I would rather watch what is happening underneath them.

Markets Rebound Day After Rate Hike — What's Driving the Rally?
Stocks took back Wednesday's Fed day and more: QQQ +1.73% to $716.92, SPY +1.13% to $762.60, the S&P 500 +1.14% to 7,637.76, against Wednesday's 0.45% decline. The lift came from outside the Fed. Weekly jobless claims unexpectedly fell, which says the labor market is not cooling the way the rate path assumes, and oil kept sliding, easing inflation pressure. Yields fell and megacap tech led. The uncertainty everyone waited on is behind the market now. But the dot plot still points to one more hike this year, and only the hike already delivered is in the price. What is the market betting on?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • FrankRebecca
    09-17 13:53
    FrankRebecca
    Mortgage transmission is the part people still underweight. Even if hikes pause, heavy Treasury supply can keep term premium and 30Y mortgage rates sticky, which hits housing and capex before the next Fed guess does.
Leave a comment
1