this week
Continuing the trend of the past few weeks, markets were once again focused on concerns about the Federal Reserve and the artificial intelligence (AI) bubble.
After weeks of focussed on inflation fears, Fed officials saw the rate twice as high this week. voter (Waller and Williams) support cuts in December due to the soft labor market. And despite the headline gain of +119k jobs in September, there is still cause for concern. The unemployment rate reached a 4-year high (only 4.4%), and the economy saw (small) net job losses in June and August. Therefore, the probability of a rate cut in December has increased to 70% from just 30% earlier this week.
On the AI front, Nvidia had strong Q3 results – nearly 60% year-over-year revenue growth and $500 billion in sales commitments by next year. This was enough to ease all AI concerns for about 18 hours.
For the week, the Nasdaq-100® is down 3% (blue line), while 10-year Treasury yields have fallen nearly 10bp to 4.05% (black line).
next week
Here’s what I’m looking forward to next week:
- Producer Price Index on Tuesday
- retail sales on tuesday
- unemployed claims on wednesday
