“Sometimes we stare so long at a door that is closing that we see too late the one that is open.” ~ Alexander Graham Bell
Markets remain in what Fundstrat Head of Data Science Ken Xuan terms a “vortex of pain.” We opened on Monday with markets continuing to digest the previous week’s central bank actions (from the Fed, the Bank of England, and the Bank of Japan.)
Last week’s FOMC meeting led to renewed fears among many market participants that the Fed would stay “higher for longer.” A continued surge in yields followed, weighing on the stock market. Fundstrat’s Head of Data Science, Ken Xuan, pointed out that the central bank’s quantitative tightening might also have contributed to yields climbing: during the week of September 18, the Fed reduced its balance sheet by $75B – the largest weekly decline since QT began. Part of this was achieved through a significant sell-off in Treasuries, possibly depressing prices and boosting yields.Regardless of the reason for surging yields, Head of Technical Strategy Mark Newton began his remarks at our weekly huddle by noting that, “The biggest thing you have to understand that the equity market right now is that rates and equities are very inversely correlated and with rates moving up...