Latest / Markets with Megan: A Quick Financial Markets Update / Impact of Declining Interest Rates on the Equity Market | Episode 057 | 10-10-23

Transcript

Impact of Declining Interest Rates on the Equity Market | Episode 057 | 10-10-23 · Markets with Megan: A Quick Financial Markets Update

• 0:05
  Speaker 0: Good morning.
• 0:05
  Speaker 0: This is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:08
  Speaker 0: We're coming to you today with a regular segment of Markets with Megan and we're going to break it apart today in two different segments.
• 0:15
  Speaker 0: First of all, we want to talk a little bit about the market reaction that we've seen today.
• 0:19
  Speaker 0: We talked yesterday about the initial market reaction to the crisis that's going on the Middle East.
• 0:25
  Speaker 0: What we've seen today is another big rally in the equity markets.
• 0:29
  Speaker 0: This isn't necessarily driven because there's been some major change in what's going on in the conflict in Israel and Hamas.
• 0:37
  Speaker 0: It's primarily because we've seen a major drop in interest rates today.
• 0:41
  Speaker 0: That is the flight to safety we didn't see yesterday because the bomb markets were closed.
• 0:45
  Speaker 0: The 10-year Treasury, for example, dropped from a 4.80% all the way down to a 4.65% today.
• 0:52
  Speaker 0: Many markets being driven by that drop in interest rates, not some major change in the economy or the geopolitical tensions.
• 1:01
  Speaker 0: Let's jump right to the economic data that we got today.
• 1:04
  Speaker 0: What we got today was the NFI Small Business Optimism Index.
• 1:09
  Speaker 0: This fell to a four-month low in September.
• 1:12
  Speaker 0: There were 582 different employers that were surveyed.
• 1:16
  Speaker 0: Some of the details within the report that we're focusing on those expecting credit conditions to deteriorate over the next six months.
• 1:25
  Speaker 0: That's all another big increase.
• 1:27
  Speaker 0: Again, credit conditions are tight.
• 1:30
  Speaker 0: We've talked about this before.
• 1:31
  Speaker 0: Another part of the report they suggested that it was harder to get loans compared to three months ago.
• 1:38
  Speaker 0: That was the most amount of companies that has said that it was harder to get loans that we've seen since March of this year.
• 1:46
  Speaker 0: Let's remember in March of this year is when SVP Bank collapsed.
• 1:49
  Speaker 0: This is not a great report.
• 1:52
  Speaker 0: It confirms everything we've been talking about.
• 1:56
  Speaker 0: Confidence, not only for consumers but also business owners, is weakening just more headwinds for the rest of this year.
• 2:02
  Speaker 0: We'll keep you updated the rest of this week with some more economic and market data.
• 2:06
  Speaker 0: If you have any questions or comments, please feel free to reach out to podcast at Verdence dot com.
• 2:10
  Speaker 0: Thank you,