Market Environment - The recent government shutdown did not negatively impact the equity market rally, and there was relief when it ended [3][4] - The political and fiscal disruptions are expected to continue influencing market volatility [4][6] Federal Reserve Insights - The Federal Reserve is facing challenges with inflation stalling around 3% and concerns about a weakening labor market [8][10] - There is speculation about potential rate cuts, with a belief that the Fed may cut rates in December due to economic slowing [11][12] - The economy is described as bifurcated, with different growth rates for lower-end consumers and larger companies [12][14] Economic Outlook - The trend of disinflation is expected to continue, which may support further rate cuts [16][23] - The composition of the Federal Reserve is anticipated to become more dovish, which could benefit interest-sensitive sectors of the economy [22][23] Technology and AI Investment - There is optimism about the long-term potential of artificial intelligence as a technological game-changer, although the market is still in early stages [24][25] - Concerns exist about the potential for excessive debt accumulation in building AI infrastructure [25][26] Credit Market Dynamics - The current environment is characterized by cyclical risks rather than structural risks, with no widespread structural issues identified at this time [27][29] - Investors are advised to conduct thorough due diligence to understand the underlying value of investments [31][32]

mezzotint / Shutterstock.com 24/7 Wall St. Key Points: The potential for the government shutdown to end was the fuse that lit the Monday rally. With the massive layoffs reported in October, many of which were related to Artificial Intelligence, all of the economic data from here to the end of the year will be closely watched. It appears that the Fed will lower rates again in December; the question for Wall Street and investors is by how much? Some investors get rich while others struggle because t ...

The US Treasury building in Washington, DC. Treasury yields climbed this week as traders scaled back expectations for a Federal Reserve rate cut in December following hawkish signals from Chair Jerome Powell and signs of resilience in the US economy. Most Read from Bloomberg The yield on 10-year notes closed around 4.09% on Friday after starting the week below 4%. The move reflects a shift in market sentiment with interest-rate swap contracts tied to the Fed’s December meeting now implying roughly even o ...

Core Insights - U.S. stock futures showed mixed performance following a meeting between Presidents Trump and Xi, which resulted in significant trade agreements, including reduced tariffs on U.S. fentanyl and increased soybean imports from China [1][2] - Fed Chair Jerome Powell's comments on interest rates created downward pressure on stocks, indicating that further cuts are not guaranteed [1][2] Market Performance - The 10-year Treasury bond yielded 4.07%, while the two-year bond was at 3.59% [2] - Market expectations for a Federal Reserve interest rate cut in December stand at 70.4% [2] - Major indices showed varied performance: Dow Jones -0.19%, S&P 500 +0.03%, Nasdaq 100 +0.06%, Russell 2000 +0.36% [2] Company Focus - Alphabet Inc. reported a revenue of $102.35 billion and earnings of $2.87 per share, leading to a premarket surge of 7.57% [6] - Meta Platforms Inc. saw a decline of 7.39% despite reporting earnings of $1.05 per share, affected by a significant one-time tax charge [6] - Microsoft Corp. experienced a drop of 2.78% as it projected second-quarter sales between $79.50 billion and $80.60 billion, slightly below market estimates [6] - Amazon.com Inc. was down 0.50% ahead of its earnings report, with expectations of $1.57 per share on revenue of $177.74 billion [12] - Apple Inc. shares rose 0.72% as analysts anticipate earnings of $1.77 per share on revenue of $102.17 billion [12] Analyst Insights - Market strategist Ed Yardeni expressed caution regarding the economy and stock market, warning against fueling speculation through easier monetary policy [9] - LPL's Chief Equity Strategist Jeff Buchbinder noted that the S&P 500 is defying historical trends associated with October, maintaining a neutral stance on equities while favoring large-cap growth [10]

Interest Rate Expectations - The market on Kalshi prices in a 75% probability of a 25 bps (basis points) Federal Reserve rate cut in December [1] - Only 21% of the market expects interest rates to remain unchanged [1]

Group 1 - The Consumer Price Index (CPI) for September showed a month-over-month increase of 0.3%, which was better than anticipated, with core inflation rising by only 0.2% [1][2][6] - Year-over-year inflation figures for both core and headline CPI came in at 3%, indicating a deceleration in inflation, which alleviates some concerns regarding tariffs and their impact on inflation [1][3][10] - The report is considered significant due to the government shutdown delaying other economic data, making this report more impactful [2][8][9] Group 2 - The Federal Reserve is expected to cut interest rates, with a quarter-point cut anticipated next week and possibly another in December, as the inflation data provides them with the necessary cover [11][15][36] - Despite the positive CPI report, inflation remains above the Fed's target of 2%, indicating that the Fed has substantial work ahead to manage inflation effectively [10][19][70] - The bond market reacted positively, with yields dropping below 4%, reflecting market expectations of rate cuts [12][14][57] Group 3 - The inflation report indicates that while some areas, such as food and energy, are experiencing price increases, overall inflation is stabilizing, which could influence the Fed's monetary policy decisions [25][61][70] - There are concerns about the labor market softening, with job cuts reported from major companies, suggesting a cautious approach to hiring amid economic uncertainty [45][47][49] - The market is currently experiencing a risk-on rally, with large-cap tech stocks leading, but there are signs of froth and over-speculation, prompting a need for diversification in investment strategies [50][72][76]

Group 1: European Market Reactions - The U.K.'s FTSE index is expected to open slightly lower, while Germany's DAX is projected to rise by 0.2%, France's CAC 40 is up 0.13%, and Italy's FTSE MIB is down 0.1% [1] - France's political landscape is under scrutiny following Prime Minister Sebastien Lecornu's resignation, which occurred just 27 days into his tenure [2][3] - Lecornu's resignation led to a decline in France's CAC 40 index, which closed approximately 1.3% lower, with major French banks like Societe Generale, BNP Paribas, and Credit Agricole each dropping over 3% [3] Group 2: U.S. Market Dynamics - U.S. stock futures are slightly lower after Wall Street reached new highs, driven by optimism regarding potential mergers and acquisitions and an anticipated Federal Reserve rate cut [4] - The ongoing U.S. government shutdown, now in its second week, has delayed the release of critical economic data, including the September jobs report, impacting the Federal Reserve's decision-making process [5] Group 3: Asian Market Performance - Japan's Nikkei 225 index achieved a record high for the second consecutive session, buoyed by a tech rally on Wall Street [6]

Core Insights - The Federal Reserve's recent rate cut has not led to a decrease in mortgage rates, contrary to expectations [1][2] - Mortgage rates are influenced more by long-term bond yields, particularly the 10-Year Treasury Note, rather than short-term Fed rate changes [3][4] Economic Factors - Current inflation rates are rising, with the Consumer Price Index (CPI) reaching 2.9% in August 2025, which is above the Fed's target of 2% [5] - Increased inflation leads lenders to demand higher yields due to the perceived risk of future bond devaluation [6] - The U.S. Treasury is issuing record levels of debt to address federal funding gaps, contributing to an oversupply of bonds and driving yields higher [6]

Impact on Savings and Deposits - Savings and checking account rates generally follow the federal funds rate, but changes may be modest due to the small rate cut [2][3] - The best savings account rates have hovered around 4% APY, and fewer accounts may offer rates that high going forward [3] - CD rates are also tied to the federal funds rate and are expected to decrease [4] - Locking savings into a CD can guarantee a higher rate through the term, which is beneficial if further rate cuts are expected [5] Impact on Loans and Credit - Personal loan rates, recently averaging around 12%, are expected to drop slightly, with the best rates available to those with good to excellent credit [6][7][8] - Credit card rates are closely tied to the prime rate, which is also linked to the federal funds rate [9] - Credit card rates, recently averaging around 21% to 22%, remain one of the most expensive borrowing options [10] Impact on Investments - Fed rate cuts are generally positive for the market because lower borrowing costs allow companies to spend more on operations and expansion, potentially increasing stock values [11][12] - Investment decisions should be based on a well-diversified portfolio, time horizon, and risk tolerance, rather than solely on Fed actions [13]

Mortgage rates are at the lowest levels we've seen in a year. Well, the Federal Reserve's benchmark interest rate does not directly affect mortgage rates. They are connected.So, how will a cutting cycle affect the housing market. Lawrence Yu, National Association Realtors chief economist is joining me now. Good to see you, Lawrence.We also have the backdrop of uh housing starts which showed some weakness, the lowest since May last month. So, that reflecting one part of the housing market as well. But as the ...