The new US Treasury Secretary – Scott Bessent – is focused on the right goal. He wants a lower US 10-year yield. The former Hedge Fund manager knows how important a lower US 10-year treasury is to the growth of the economy (and the government). His direct language reflects a reality – as most people don’t borrow at the short end (i.e., the rate set by the Fed)
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And The New Year Begins… Slowly
The trading year for 2025 is under way. Markets have worked their way through the so-called Santa Clause Rally. For those less familiar – this refers to a period of trading between the last five trading days of December and the first two trading days of January. This year Santa delivered a fat lump of coal. The market lost ground. So what does that mean for 2025? Absolutely nothing! Don’t read anything into it! What’s more important is Q4 earnings season… and how company’s perform.
End of 20-Year Cheap Money Era
Equities were seemingly caught off balance with the Fed’s ‘surprise hawkish shift’. From mine – there was very little surprising about it – you only needed to look at the data. However, what I was more interested in was how Powell would explain why they were cutting rates. As it turns out he struggled – leading to a small sell off in stocks. The irony was Powell did a better job of explaining why rates should not be lowered (which is obviously at odds with their decision to cut).