To The Moon

Stocks had a muted performance as markets geared up for a busy week of earnings reports, with 110 S&P 500 companies set to release third-quarter results. Despite a relatively minor drop, only 81 components of the $.SPX(.SPX)$ closed in positive territory, leading to a 0.2% slip for the index. $.IXIC(.IXIC)$ managed a 0.3% gain, largely driven by big tech stocks $NVIDIA Corp(NVDA)$ $Apple(AAPL)$ , while the Dow Jones Industrial Average fell 0.8%. All three indexes remain on a six-week winning streak.

Rising Treasury Yields Signal Market Caution

Rates

The bond market continues to experience upward pressure on yields, with the 10-year U.S. Treasury yield rising 0.11 percentage points to hit 4.18%, a significant jump from 3.62% just before the Fed September meeting.

Since that meeting, strong U.S. economic data has poured in, and the Fed has expressed caution about implementing additional near-term rate cuts. As a result, traders have adjusted their expectations, now predicting a slower and shallower descent for interest rates. This recalibration has pushed Treasury yields up across all maturities. There’s also growing concern over U.S. government spending and the potential need for increased borrowing, especially with the upcoming election and little focus on budget balance from either political party. This uncertainty has added pressure to longer-term Treasury yields.

Gold Shines as the Ultimate Safe Haven

In this environment of rising yields and fiscal uncertainty, gold has emerged as the top-performing asset, reaching a record high of about $2,725 per ounce. This marks a 32% increase in 2024, outperforming the S&P 500 by nearly 10 percentage points. $ETFS Physical Gold(GOLD.AU)$

$GOLD.AU

Election Uncertainty and Fiscal Outlook

As the U.S. presidential election nears, both major candidates—Vice President Kamala Harris and former President Donald Trump—propose policies that would significantly add to the national debt. According to the Committee for a Responsible Federal Budget, Trump’s tax plans could add $7.5 trillion, while Harris’s would add around $3.5 trillion.

Conclusion: A Balancing Act

As the market heads into a busy earnings season, there are multiple factors at play. While rising Treasury yields and fiscal uncertainty loom large, the strength in gold offers a haven for cautious investors. With a contentious election around the corner and little clarity on the future of U.S. debt management, safe-haven assets like gold may continue to outperform, even as stocks remain on their winning streak.

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This report is for informational purposes only and should not be construed as financial advice. Market conditions can change rapidly, and investors should consult a financial professional before making investment decisions. Past performance does not guarantee future results.