Latest / Markets with Megan: A Quick Financial Markets Update / Dissecting Federal Reserve Comments and Market Impact | Episode 069 | 11-09-23
Transcript
- 0:05Megan Horneman: Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors, coming to you today with our regular segment of Markets.
- 0:11Megan Horneman: With Megan, we're going to talk about the markets today.
- 0:14Megan Horneman: The Federal Reserve had a much anticipated speech.
- 0:17Megan Horneman: Jerome Powell made some comments that move the markets.
- 0:20Megan Horneman: But we want to start with what initially started the move in the market and that was a really weak Treasury auction.
- 0:28Megan Horneman: The 30-year Treasury bond was issued today Really awful auction.
- 0:33Megan Horneman: We've had some weak auctions in the past and it's resulted in interest rates moving higher, but this one was really bad.
- 0:40Megan Horneman: When you look at the yield that came out, it was much higher than was anticipated.
- 0:45Megan Horneman: The bid to cover ratio that was very low.
- 0:48Megan Horneman: So this is just a weak auction.
- 0:50Megan Horneman: It started to sell off in the bond market and then Federal Reserve Chairman Chiro and Powell came back out and what is surprising to me is that he didn't make any different comments than he did at the meeting on November 1st.
- 1:03Megan Horneman: Yet since November 1st we've seen a pretty big rally in the equity markets, thinking that the Fed was going to cut interest rates.
- 1:10Megan Horneman: They said they're not going to.
- 1:11Megan Horneman: They reiterated that.
- 1:13Megan Horneman: He reiterated that in his speech today, saying that they still have a long way to go with inflation, that rate hikes are not off the table.
- 1:20Megan Horneman: This has resulted in equities turning back around pretty big sell-off in the equity market today.
- 1:25Megan Horneman: A pretty big sell-off in the bond market as well, with yields rising Again.
- 1:30Megan Horneman: The Fed is being very transparent with what they're telling us.
- 1:33Megan Horneman: We've been mourning investors about this for a while.
- 1:35Megan Horneman: The Fed is telling us that rate cuts are not on the horizon.
- 1:39Megan Horneman: Inflation is still their most important concern and they will do whatever it is for inflation at the expense of economic growth.
- 1:47Megan Horneman: This is why we're cautious about growth.
- 1:50Megan Horneman: We still think a recession is unavoidable and we think there still is time that we're going to see these tight monetary conditions filter into the economy.
- 1:57Megan Horneman: This is going to have an impact on economic growth.
- 2:00Megan Horneman: This is the only way we're going to be able to get inflation under control and we've consistently told people that From an asset allocation perspective, we haven't been long interest rate exposure.
- 2:11Megan Horneman: We've been relatively close to the benchmark and we've been warning and have been very cautious on those high PE growth type of sectors in the equity market.
- 2:20Megan Horneman: We're seeing these sell-off today as a result of these hawkish comments from the Federal Reserve Chairman.
- 2:25Megan Horneman: We'll be back with more details on the markets and if you have any questions or comments, please feel free to reach out to podcasts at verdencecom.
- 2:33Megan Horneman: Thank you,