Day Hagan Tech Talk: FOMC
A downloadable PDF copy of the Article: Day Hagan Tech Talk: FOMC (pdf)
Summary
Fed watchers and prognosticators continue to lather on about whether the Fed is behind the curve and whether it should cut 25 basis points (bps) or 50bps on 9/18/24. At Day Hagan, we rely on our models and charts, not opinion, for guidance.
How Much and How Fast
May We Never Forget (9/11)
I find it intriguing that very few are ever satisfied with the Fed. Maybe it’s just human nature to complain about things. Yet, as we penned earlier this week, “the quantitative, unemotional outlook confirms that economic growth is decelerating but still positive overall. However, the economic growth story is clearly under more pressure.” With next week’s Fed meeting starting on 9/17 with a policy announcement on 9/18, and following up on my report two weeks ago highlighting completed and looming tops in the interest rate market, I think the two most important questions now are how much will the Fed cut, and how fast will the Fed cut?
Some on Wall Street are calling for a 50bps cut (this number fell after yesterday’s CPI report), but considering that the Fed is usually slow or late to act (versus when markets suggest), I wouldn’t be surprised if it is only 25bps.
Figure 1: Yield Curve and Fed Funds Rate (FFR). | Is the Fed aware of the distance between yields and FFR?
Figure 2: Treasury/Corporate proxy with rising 40-week MA. Weekly data. | Bullish.
Please note:
Figure 3 in last week’s Tech Talk report (Staples and Financial relative to Technology) included incorrect commentary. It should have said: In both charts, a rising line depicts “Technology underperformance.” Please reach out for an updated chart.
U.S. Dollar/Japanese Yen (142.37): A potential aftershock is close at hand as this relationship is on the verge of breaking down again. A breakdown, which hasn’t yet occurred, may again wreak havoc on global liquidity. It needs to hold current levels. Having featured this chart in a mid-August report, please reach out for an updated chart.
S&P 500 (5554.13): To reiterate, considering current domestic and international political events and seasonal headwinds, a time correction and/or a price correction prior to the November elections shouldn’t be surprising. Please reach out for a chart.
Levels: Support – 5400+/- (key level), 5376 to 5373 (gap), 5300+/-
Resistance – 5570+/-, 5651+
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 9.10-11.2024. Chart source: Stockcharts.com unless otherwise noted.
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