The Week in Review: 9/30/2024

"What we learn from history is that people don't learn from history." – Warren Buffett

Good Morning ,

Last week left the markets modestly higher apart from small caps…our markets have advanced for 3 straight weeks.

The market's attention was largely focused on China during the past week, as the country's officials announced a raft of measures aimed at boosting consumption, property demand, and stock market liquidity.

The People's Bank of China lowered its reserve requirement ratio, the repurchase rate, the medium-term lending facility rate, and hinted at a potential cut to the loan prime rate.

A flood of fiscal spending was also announced with upcoming bond issuance expected to reach roughly half of the amount spent to counter the Great Financial Crisis.

Chinese equities soared in response jumping 13.0% for the week while risk assets in Europe and the U.S. also showed strength, though ongoing pressure on the price of crude kept growth concerns at the back of the market's mind.

There was also renewed strength in semiconductor names after Micron beat quarterly expectations and issued strong guidance. The stock rallied to a two-month high, taking the PHLX Semiconductor Index for the ride (+4.3% for the week).

Longer-dated Treasuries ended the week with slight losses, while the 2-yr note eked out a gain as rate cut expectations increased.

At the end of the week, the fed funds futures market was pointing to a 54.8% implied likelihood of another 50-basis point cut in November, up from 50.4% a week ago.

It is important to keep things in perspective regarding interest rates… historically, the Unemployment Rate is not that high.

Mortgage rates are falling, and Inflation is in check… that is why the Fed is comfortable lowering rates…

Mortgage refinancings jumped 20% since April 2022.

Market Snapshot…

• Oil Prices – Oil prices suffered a weekly loss with the prospect of growing supplies coming from Saudi Arabia. West Texas Intermediate crude was down 51 cents or 0.5% to settle at $68.18 a barrel, while Brent crude futures were down 38 cents, or 0.4% to $71.98 a barrel.
• Gold– Gold prices were heading for their best quarter in more than eight years. Spot gold was down 0.7% to $2,651.88 per ounce. U.S. gold futures rose 1.2% to $2,643.30. Silver finished the week at $31.816.
• U.S. Dollar– The dollar fell to 100.3 last week after the inflation readings signaled price pressures continued to fade. The dollar index was down 0.17% at 100.43. Euro/US$ exchange rate is now 1.119.
• U.S. Treasury Rates– The U.S. 10-year Treasury yield fell about 3.5 basis points at 3.756% after inflation data showed the rate of price increases is near the Fed’s target rate.
• Asian shares were mixed in overnight trading.
• European markets are trading lower.
• Domestic markets are mixed this morning.

This week’s feature will be Friday’s nonfarm payrolls report, which will be the first of two such reports before the Fed’s next policy meeting in November. The Fed’s shift to the labor market focus will lend weight to the importance of this report as it contemplates whether to implement another 50 bps. cut, or a 25 bps. cut at its next meeting. In addition, we will also receive the ISM Manufacturing and Non-Manufacturing reports for September.

Have a wonderful Week!

Michael D. Hilger, CEP
^®Managing Director

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