Bond Market Reaction & Fed Policy - The long end of the curve is considered cheap based on valuation metrics, but the front end could also move if economic data weakens due to a prolonged shutdown [2] - The market is pricing in gradual Fed cuts to neutral, but a worsening economy (unemployment rate above 45%) could lead to more aggressive Fed action [2] - An independent Fed is responding to data and aiming to reduce the level of restrictiveness, making bonds attractive [6] - The Fed is expected to cut rates to 3%, which is close to neutral, even without a significant slowdown [8] Auction & Demand - End-user demand for Treasury auctions remains strong, indicating structural positives in the US economy [5] - Structural positives in the US economy, such as AI capex and strong corporate fundamentals, are driving demand for US bonds [6] - People look at 55%-6% in high-quality bonds and they like it [6] Investment Strategy & Risk Hedge - The 5 to 10-year part of the curve is considered a sweet spot, offering a balance between yield and duration risk [3][14][15] - Bonds are still considered a hedge, especially with the Fed likely to cut rates more aggressively [12][13] - Investors may diversify into other assets like gold and cryptocurrency, but US Treasuries remain a safe haven [9][10][11][12] - High-yield market can offer yields higher than 5%-6% without taking on that much duration risk [15]

Meanwhile, I want to get over to Diana Ol. She's got the weekly mortgage applications report. Good morning to you. >> Good morning, Andrea.Yeah, the refi boom we saw just a few weeks ago just went bust thanks to higher mortgage rates. The average rate on the 30-year fix for conforming loans increased last week to 6.46% from 6.34%. That's for loans with 20% down according to the Mortgage Bankers Association.Now, as a result, applications to refinance a home loan dropped 21% last week from the previous week. ...

Euro-area inflation accelerated in September, cementing the European Central Bank’s plans to keep interest rates steady for now https://t.co/2UydRWU1I5 ...

Euro zone inflation accelerated last month on higher services prices and a smaller decline in energy costs, likely reinforcing bets on the ECB keeping interest rates on hold for some time. ...

Confidence among Japan’s large manufacturers improved for a second straight quarter, supporting the case for the Bank of Japan to raise interest rates as early as this month https://t.co/uKToKlBP45 ...

[Music] Washington is in turmoil once again with investors wondering how a government shutdown can affect their money. That's what we're digging into on today's Stocks and Translation. A shutdown happens when Congress misses a budget or a short ter short-term fix.Essential services keep running, but many others pause as most federal workers are temporarily let go or furlowed. So, let's break down what a government shutdown is and is not. First, it's a temporary funding lapse.It slows some services and it ca ...

Market Overview & Outlook - Equity market experienced a phenomenal recovery, with low stocks up 38% since Liberation Day [1] - A potential 5-10% correction is possible, considering the S&P's forward multiples at approximately 22 times earnings and the 10-year Treasury yields slightly above 4% [2] - The market is expected to see a rolling rotation, with profit-taking from the "Magnificent Seven" benefiting small-cap, value, and international stocks [3] Earnings & Revenue Performance - Second-quarter revenues increased by 6% year-over-year, and earnings increased by 12% year-over-year, both exceeding expectations [4] - Third-quarter revenues are projected to increase by approximately 6-7%, with earnings expected to show solid double-digit growth [4] - Federated Hermes is reevaluating and increasing its earnings estimates for the remainder of the current year and the following year [5] Economic Indicators & GDP - The U S GDP estimate for the next year is 28%, while the blue-chip consensus is 15% [6] International Markets - International stocks are considered attractive due to valuations being 40% cheaper than domestic stocks, compared to a typical discount of 20% [8] - The dividend yield on international stocks is approximately 29%, significantly higher than the S&P's 12% [8] - A weak dollar and accommodative foreign central banks are expected to facilitate stronger economic and earnings growth in international markets [9] - The company maintains an overweight position in international assets, viewing them as a favorable subcategory [10]

Colombia’s central bank defied pressure to cut interest rates after a surprise jump in inflation and a warning from the IMF about the gaping fiscal deficit. https://t.co/nPWWZjDDgp ...

The Chinese government is understandably afraid of another bubble. Such fear may delay further cuts in interest rates. But hesitation also poses risks https://t.co/QK1SQTASsP ...

HELSINKI (Reuters) -The euro zone economy is handling U.S. tariffs better than earlier expected, leaving inflation risks "quite contained," European Central Bank President Christine Lagarde said on Tuesday. The ECB has kept interest rates steady since June and signalled that it was in no hurry to adjust policy further as the economy was holding up and inflation was now firmly around its 2% target. Financial investors have largely priced out any further rate cut and most policymakers argue that December ...