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Markets edge higher on hints the Fed could pause on a rate hike

Dow went up 82, advancers over decliners 3-2 & NAZ gained 28.  The MLP index was flattish near 239 & the REIT index was steady in the 364s.  Junk bond funds were little changed & Treasuries had more buying which reduced yields (more below).   Oil rose higher in the 87s & gold added 5 to 1948.

AMJ (Alerian MLP Index tracking fund)


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Treasury yields fell as investors fretted over the possibility of further interest Rate hikes following the release of fresh economic data.  The yield on the 10-year Treasury was down 3 basis points at 4.23% & the 2-year Treasury yield was about 2 basis points lower at 4.938%.  Yields & prices have an inverted relationship & 1 basis point equals 0.01%.  Fears of further interest rate hikes have been mounting this week as several economic data points suggested sustained inflationary pressures & tightness in the labor market.  This included initial weekly jobless claims data yesterday that came in below the expected 230K.  Cooling the labor market has been a key aim for the Federal Reserve alongside easing inflation.  The central bank has followed a restrictive monetary policy approach since early 2022, implementing a series of rate hikes to tamp down stick inflation.  The prospect of more hikes, or elevated rates for longer, has fueled concerns of a potential economic downturn.  Markets are widely anticipating that the Fed will leave rates unchanged at its Sep meeting, but expectations for a Nov rate hike have been on the rise, with traders pricing in a 55% chance, according to CME's FedWatch tool.  Investors are gearing up for key data releases next week, including the latest consumer & producer price index reports.  Several Fed policymakers said earlier this week that inflation data would be key for their decision-making going forward. 

U.S. Treasury yields decline as investors consider interest rate policy path 

Time is running short for Ford (F), General Motors (GM) & Stellantis (STLA) to reach respective agreements with the United Auto Workers (UAW) for new contracts.  UAW Pres Shawn Fain reiterated that his union is ready to strike against any of Detroit's Big Three automakers that have not made a deal before next week's deadline.  When asked during an interview whether the labor union would strike against any of the companies that do not have tentative agreements in place when the current contracts expire at 11:59 PM on Sep 14, Fain said, "That's the plan."  The labor union is seeking a 46% pay raise over the 4-year contract along with an array of additional benefits, including a reduction of the workweek to 32 hours for 40 hours worth of pay for its 146K members at Ford, GM & Dodge parent STLA, whose latest offer the UAW rejected last month.  But he "left open the possibility of avoiding a strike" & "acknowledged, more explicitly than he has before, that the union will have to give up some of its demands to reach agreements."  The UAW chief also said there has been some progress in negotiations with GM & Ford, but STLA has still not presented a counteroffer.  STLA said last week that talks between the company & the UAW's bargaining team "continue to be constructive."  Fain has made it clear for weeks that the UAW is prepared to strike against any & all of the Big Three automakers that do not bend to the union's demands.  He was elected this year after running on a campaign that promised a more aggressive approach than previous UAW leaders.  He said ahead of his win that the union's members "have had enough with concessions and company-friendly leadership."

UAW president warns automaker strike coming next week without a deal

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Buyers are nibbling after selling early this week.  The thought of a strike on the automakers is sobering.  At the same time, high interest rates are troubling for the stock market.

Dow Jones Industrials


This post first appeared on VerySmartInvesting, please read the originial post: here

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Markets edge higher on hints the Fed could pause on a rate hike


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