All METARs know by now the the Federal Reserve cut the fed funds rate as the markets predicted and MSM economic writers practically commanded.
Both CPI and PCE index show that inflation has dropped close to the Fed’s target rate of 2%. This will support the Fed’s intention to gradually reduce the fed funds rate to a neutral level.
The stock market responded with pleasure even though the Fed’s move was widely expected.
The Fear & Greed Index is in Greed.
Treasury yields have been falling along the yield curve for several weeks. Apart from the fed funds rate, the yield curve is now positively sloped.
Junk bond yields are falling. Lower yields help weak companies refinance maturing debt but also shows confidence by investors that the economy will stay strong so companies have enough cash flow to pay interest. National financial conditions are loose and trending looser.
The trade is risk-on as SPX and junk bonds are rising faster than Treasuries. USD is falling which can be a plus for export trade.
Mortgage rates are dropping which can be a plus for the housing market.
The price of copper is rising while oil prices are falling. Gold is also rising but copper is rising faster than gold (a “mungofitch ratio” that shows growth in the real economy of things).
The Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 was 3.1 percent on September 27. This has been in a gradually rising trend for the past month. It’s a respectable growth rate, sustainable and far from recession.
The Semiconductors industry has a total of 66 stocks, with a combined market cap of $5,948.45 billion , total revenue of $495.53 billion and a weighted average PE ratio of 51.78
Note to all of you. I do not trade on this information or speculation.
There is nothing to go on yet. Things are up in the air.
adding, we did not see this
Additionally, Japan and China are now clashing over chip export restrictions, and that could be spooking some investors as the military threat from Beijing is seen as one of the biggest long-term risks for TSMC stock.
The U.S. has been pressuring Japan to further restrict exports of advanced chipmaking technology to China, and Beijing is now threatening economic retaliation including withholding rare earth metals and other minerals needed for technology like auto production.