Trajectory of S&P 500 Rhymes But Doesn't Repeat

Last week’s edition of our S&P 500 chaos series had the headline “The S&P 500 Dips Outside Redzone Before Rallying to Return. As you might guess from the headline for this week’s edition, the index’s behavior this week rhymed with that pattern, but didn’t repeat since it started and ended at a lower level.

For us, that means there’s not much in the way of new analysis to offer that we haven’t already shared.

We are however watching the Fed’s minions, who are now trying to set investor expectations for rising interest rates in 2022 and especially in 2023, which aren’t yet affecting the trajectory of stock prices, but will as we get closer to those potential events. For now, investors are still focusing on the latter portion of 2020-Q4, when the Fed is expected to start tapering its bond buys to stimulate the U.S. economy as it tries to try to slow inflation growth. Both these factors were very noticeable in the past week’s news stream.

Monday, 27 September 2021

• Signs and portents for the U.S. economy:

• Strong U.S. business spending on equipment seen underpinning GDP growth in Q3
• Oil up on tight supply, Brent crude nears $80 a barrel

Fed minions can’t stop talking taper, two announce resignations after trades are made public:

• Fed officials: Bond taper still hinges on continued job growth
• Ready to taper or waiting for more data? Recent Fed officials’ comments

• Fed’s Evans sees taper close, expects rate hike in 2023
• NY Fed’s Williams says tapering of asset purchases may soon be warranted
• Fed’s highest priority is to get people back to work: Kashkari
• Brainard: U.S. “behind” on building climate risk into financial supervision

Fed’s Rosengren Retiring Due To Health, Following Trading News

Fed’s Kaplan to leave job Oct. 8, citing trading activities

Bigger trouble developing in the Eurozone, China:

• Euro zone corporate business slows further

• German inflation could stay above 2% through mid-2022 -Bundesbank

China power crunch spreads, shutting factories and dimming growth outlook

ECB minion would like higher inflation still:

• ECB’s Lagarde keeps door open to higher inflation

Tech pulls Nasdaq, S&P 500 down as Treasury yields rise

• Rising Treasury yields hit tech stocks; oil at 3-year highs

Tuesday, 28 September 2021

• Signs and portents for the U.S. economy:

• Marketmind: Time to expect inflation
• U.S. consumer confidence hits seven-month low as near-term economic outlook dims
• Brent dips after topping $80 a barrel, highest since Oct 2018
• Yellen says U.S. may exhaust cash by Oct 18 barring debt ceiling rise

Fed minions want higher interest rates, think economy is fine, chief Fed minion interviewing to keep job wants to keep stimulus flowing:

• Exclusive-Fed’s Bullard: More aggressive Fed stance best to ensure longer expansion
• Fed’s Powell says economy is a long way from maximum employment

• Fed’s Powell faces heated questions on trading, regulation and diversity

Fed’s Bostic: U.S. job market in a “jumble,” but economy on firm footing

Bigger trouble developing in Asia:

• World Bank says Delta variant slowing economic growth in East Asia and Pacific
• China’s factory profits slow as industries brace for power crisis

• Citi cuts China 2022 GDP forecast to 4.9% on Evergrande spillover

ECB minions think Eurozone governments need precision skills to keep carbon taxes from hurting people, want to keep stimulus flowing:

• Carbon tax to hit people’s pockets if used poorly, ECB warns
• ECB’s Lagarde, Panetta warn against tightening too soon

Wall Street stumbles on rising Treasury yields, inflation worries

• Stocks fall, bond yields jump as rate hikes loom

Wednesday, 29 September 2021

• Signs and portents for the U.S. economy:

• U.S. pending home sales jump to seven-month high; mortgage applications fall

Fed minions setting stage for rate hikes, chief Fed minion says Fed’s only two jobs are tough:

• Fed’s Harker says it will soon be time to begin tapering bond purchases
• Fed’s Daly sees taper bar met by year end, no rate hike in 2022
• Powell: “Tension” between jobs, inflation is the chief challenge facing Fed

Bigger trouble developing in China:

• China manufacturing unexpectedly shrinks, services offer support
• Explainer-What is behind China’s power crunch?
• China’s metal consumers to feel supply sting from forced power cuts
• China’s Belt and Road plans losing momentum as opposition, debt mount -study

Bigger inflation developing all over:

• German import prices rise at fastest rate in 40 years
• Energy costs push Spain’s inflation to 13-year-high

Central bank minions starting to worry about inflation:

• Central banks parse inflation risk as turn from pandemic policy begins
• ECB’s Lagarde flags bottlenecks, energy and virus as key risks

S&P 500, Dow gain amid inflation concerns, debt ceiling debate

Thursday, 30 September 2021

• Signs and portents for the U.S. economy:

• Oil steadies after report China ready to buy more

Fed minions setting stage for rate hikes:

• Bostic: U.S. near full employment next year, rate liftoff in 2022, three hikes in 2023

Coronavirus pandemic still shaping course of national economies:

• Japan’s factory output extends declines on car production cuts

Bigger inflation developing all over:

• French inflation hit near 10-year high of 2.7% in September
• German inflation accelerates at record pace in September
• Euro zone to discuss economic hit from soaring energy prices

BOJ minion happy with never-ending stimulus policy, ECB minion starting to worry about inflation:

• BOJ Kuroda vows to keep easy policy on weak consumption, inflation
• Centeno says ECB needs to keep monitoring inflation, stand ready to act

Wall St slides, S&P 500 posts worst month, quarter since COVID outbreak

Friday, 1 October 2021

• Signs and portents for the U.S. economy:

• U.S. manufacturing expands further in September; shortages, prices rising-ISM
• U.S. consumer spending increases; inflation eroding households’ buying power
• Oil settles near 3-year high ahead of OPEC+ meeting

Fed minions setting stage for rate hikes:

• Exclusive-Fed’s Harker says economy close to achieving inflation goal for rate hikes
• Fed’s Mester repeats first rate hike could come at the end of 2022

Coronavirus pandemic still shaping course of national economies:

• India’s factory activity improved in Sept as demand strengthened
• Japan Aug household spending seen falling on pandemic hit: Reuters poll
• Euro zone factory growth strong in Sept but bottlenecks bite

Bigger inflation developing all over:

• Euro zone inflation jumps to 13-year high, worsening ECB headache

Wall Street kicks off October with broad rally, boosted by economic cheer

Last week, we featured a resource that provides a wealth of information about current interest rates for consumers. But what about historic interest rates? If you’re looking for data on 30-year conventional mortgage rates since January 1971, check out Freddie Mac’s monthly averages.