Lanceljx
09-18 12:58

I think the market is betting that the Fed can tighten without breaking the economy. Jobless claims remain strong, while falling oil and Treasury yields are easing inflation and valuation pressure. Tech benefits most if long yields stay contained.


The risk is that this becomes a “good news is bad news” trade again. A resilient labour market gives the Fed room to hike further, and the dot plot still points to another hike this year. For now, investors seem more comfortable with higher rates as long as growth holds and oil keeps cooling.

Markets Rebound Day After Rate Hike — What's Driving the Rally?
Stocks took back Wednesday's Fed day and more: QQQ +1.73% to $716.92, SPY +1.13% to $762.60, the S&P 500 +1.14% to 7,637.76, against Wednesday's 0.45% decline. The lift came from outside the Fed. Weekly jobless claims unexpectedly fell, which says the labor market is not cooling the way the rate path assumes, and oil kept sliding, easing inflation pressure. Yields fell and megacap tech led. The uncertainty everyone waited on is behind the market now. But the dot plot still points to one more hike this year, and only the hike already delivered is in the price. What is the market betting on?
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