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“It’s good to be in something from the ground floor. I came too late for that and I know. But lately, I’m getting the feeling that I came in at the end. The best is over.” – Tony Soprano
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s a quiet morning as investors await this afternoon’s Fed decision. Overnight in Asia, equities were generally higher with the Nikkei up half of one percent while Hong Kong rallied more than 1%. The tone is more subdued in Europe as stocks are experiencing measured declines. In commodities, crude oil briefly dipped below $70 per barrel but has recouped some of its losses and is now down just 1.5%.
On the economic calendar, it’s a housing-centric day. Weekly mortgage applications were just released and showed an impressive increase of 14.2%. Refinances also surged 24% to the highest level and share of total applications since early 2022. The only two other reports on the calendar for today are Building Permits and Housing Starts at 8:30.
The day you’ve finally been waiting for is finally here! After several false starts by the market, the Fed will finally cut rates this afternoon. The only question is by how much. As of this morning, futures markets put the odds at a 50 bps cut at 65% meaning it really could go either way, and while certainly not unprecedented, we can’t remember a time when there has been so much uncertainty regarding which direction the Fed would take this close to a report. This afternoon’s cut will end a streak of 288 trading days where the fed funds rate has been unchanged at a range of 5.25% to 5.50%. While it’s nowhere near the record streak of 1,756 trading days from the Financial Crisis through late 2015, it does rank as the sixth-longest streak without a change since at least 1971. It’s about time they get back to work!
This period has been more extreme regarding how long it has been since the Fed last cut the Fed funds rate. At 1,134 trading days (over four years), it will end what ranks as the second-longest period without a cut in rates since at least 1971. Again, the only period that was longer was the 10+ years from late 2008 through July 2019, and only one other streak (mid-2003 through September 2007) lasted longer than four years.
