Published September 23rd 2022

Daily Brief - Markets to stabilize post-Fed

TLDR

With 10y reaching 4%, the post-Fed market could see bond prices stabilize.

us sov 10y

“Buy the rumor, sell the news” applies to the Fed as well

The market moved well ahead of the Fed to price the risk of more hiking in the upcoming months - especially after the publication of August’s CPI.

It might well be that a stabilization of markets follows the Fed’s announcement as most of the impact is already priced in.

What does the TOGGLE Market Checklist have to say?

The Good: PMIs and positive Citi Economic Surprises!

PMIs came out strong at the start of the month, and Citi Economic Surprises turned positive this month. Recession appears averted for the time being. In fact, look at the blip in SPX Forward EPS.

The Bad: expensive valuations

SPX P/E remains stubbornly above 16x and most importantly we really don’t like that Equity Risk Premium at the 10y lows of 2.5%

Upcoming: PMIs next month…and Putin

With FOMC out of the way, we’re looking to growth gauges at the start of October. Also, we’re keeping an eye on the sabre rattling from Russia.

checklist 092222

In conclusion?

In conclusion, it’s possible that equities and bonds both stops dropping after the Fed. But watch out for Putin throwing tantrums.

Idea Spotlight: Interactive Brokers

Analyst revision indicators for Charles Schwab are coming down and historically this led to a median increase in Interactive Brokers price of 33.28% over the following 6M. TOGGLE analyzed 6 similar occasions in the past to produce the median projection and this insight received 5 out of 8 stars in our quality assessment.

Are you an Interactive Brokers user? Current users can get their monthly trading commissions refunded* and new users can get discounted trades too!

ibkr price history

Daily Brief - Markets to stabilize post-Fed

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