Fed Reserve Governor Christopher Waller fueled optimism that an interest rate cut will occur next month. This comment on top of Friday’s remark from the NY Fed President echoing a similar sentiment, has reenergized equites. At the time of this writing the market is now suggesting a 80% chance of further easing in December, up from about 25% last Thursday.
Today is the release of September retail sales and PPI data. Does this data have any relevance? Other statistics released this week are durable goods orders and a sentiment survey. The question remains…are the statistics to dated as a lot can happen in 45-60 days.
What will Wednesday’s release of the Biege Book suggest?
Attention is now beginning to focus upon “Big Tech’s AI Debt Wave.” Some believe the deluge may weaken not only weaken the issuers but also the bond market.
Bloomberg writes that “Big Tech” is expected to turn to debt for as much as $1.5 trillion by 2028 to fund expansion into AI and data centers. Some firms are beginning to voice concerns about being appropriately compensated for the risk that one may take, an environment amplified by the massive demand for monies from the Federal government.
Trading is expected to wane as the day progresses as many leave early for the Thanksgiving holiday.
Last night the foreign markets were up. London was up 0.38%, Paris up 0.15% and Frankfurt up 0.14%. China was up 0.87%, Japan up 0.07% and Hang Seng up 0.69%.
Futures are flat. There was little reaction to the dated data that was released. The 10-year is off 1/32 to yield 4.03%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
