Stocks Tumble, Dollar Climbs With Traders on Edge
Comment of the Day

September 26 2023

Commentary by Eoin Treacy

Stocks Tumble, Dollar Climbs With Traders on Edge

This article from Bloomberg may be of interest. Here is a section:  

“Investors are beginning to realize that a ‘higher for longer’ interest rate environment is a likely outcome and are slowly adjusting to the ‘new normal,’” Paul Nolte, a senior wealth manager at Murphy & Sylvest Wealth Management, wrote in a note. “Higher-for-longer has been the mantra of the Fed for a few months. It is only recently that the markets have been taking them at their word.”

Eoin Treacy's view

On days when the stock, bond and commodity markets decline but the Dollar goes up, the only clear conclusion is cash is being raised and stuffed into money market funds.

That pattern of behaviour is putting downward pressure on the very short-end of the curve while the long-end is still trending higher. The net result is the 10-year – 3-month yield curve spread is now recovering from deeply inverted territory.

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