Tuesday 30 July 2019

Here come the rate cuts

US equity indexes closed somewhat mixed, sp -7pts (0.3%) at 3013. Nasdaq comp' -0.2%. Dow -0.1% The two leaders - Trans/R2K, settled +0.1% and +1.1% respectively.




US equities opened on a moderately weak note, pressured by a number of things, not least some trade/tariff/fed chatter from Trump....

It does appear clear that Trump recognises the fed will only cut by -25bps tomorrow. The US President again noted his view that the fed should not have done QT. It is likely that QT will be ended two months early tomorrow.

The afternoon saw a lot of minor equity chop, still leaning on the weaker side. Volatility picked up, with the VIX settling +8.6% to 13.94.  

Here come the rate cuts

Wednesday will see rate cut'1, along with a probable early end to QT.

Fed rates with SPX

Tomorrow I'll add another red dashed vertical line to the above chart. That is no small matter.
I'm aware some believe it will be a 'one and done' situation, or just 2 or 3 cuts by early 2020.

Regardless, if you think rate cuts are an inherently 'good sign' for the US/global economy, I got some -10% yield Permabear corp' bonds I can sell you. You can pay me the negative yield via Paypal or Square, I really don't mind which.

yours... all payments in USD, as I sure as hell don't want anything in GBP, a currency that continues to depreciate.

Not the best of summer days
Extra charts in AH (usually around 7pm EDT) @ https://twitter.com/permabear_uk

Goodnight from London
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