📉 Market in Crisis 📉 The Federal Reserve’s recent rate cuts are not delivering the intended results. Despite a 50 bps cut in September, market behavior is defying expectations. Here’s a summary:
🔶 Interest Rates Spike:
The 10-year Treasury yield has surged 60 bps in a month, surpassing 4.20%, while the average 30-year mortgage rate is nearing 7.0%—a peak not seen since July.
🔶 Mortgage Demand Plummets:
Mortgage rates have risen from 6.1% to 6.8% in just four weeks, leading to the lowest demand since the 1990s.
🔶 Inflation on the Rise:
Core CPI inflation increased to 3.3% in September, its first uptick since March 2023. Meanwhile, unemployment dropped as the U.S. added 254,000 jobs, challenging the Fed’s expectations.
🔶 Rate Cuts Unlikely:
Markets no longer anticipate further rate cuts this year, with a 33% chance of no cuts at all in 2024.
📅 Crucial November Ahead:
The upcoming election, Fed meeting, and labor/inflation data will play a critical role. The Fed must proceed cautiously to avoid a stagflation scenario reminiscent of the 1970s.
Gradual, measured rate cuts may be the solution, not aggressive 50 bps moves.
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