The Independent Market Observer

A Quick Look at the Markets

Posted by Brad McMillan, CFA, CAIA, MAI

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This entry was posted on May 18, 2022 3:34:20 PM

and tagged Commentary

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marketsThis will be a short post as I am back from a Commonwealth conference and catching up. There are lots of things to think about, on both a professional and personal level, and I will share more going forward. As always, it was great to see my Commonwealth friends, old and new, and do some really cool stuff including a cooking class (didn’t see that coming, did you?) and a Red Sox game with Tim Wakefield, who very nicely signed a hat for my wife. She did very well out of the conference, with the hat and a signed pastry cookbook. You have to take care of the home front.

Now, Back to the Markets

Looking at the markets, perhaps I should have stayed away from the office as we have another down day. Without getting too into it, this looks like another interest rate-driven move, based on recent comments by Fed Chair Powell that tighter policy will continue. Stock markets are reacting, based on the same math I have reviewed in prior posts, which is not much of a surprise. But the interesting development is that the yield on 10-year U.S. Treasuries is down a bit and holding in the range of 2.9 percent to 3 percent, despite those comments. The bond market has apparently already priced in substantial Fed action; if so, that should limit the ultimate stock market response. In short, it’s a bad day, but so far the underlying conditions have not changed for the worse. Looking at the data, in fact, rates have remained pretty stable for the past month. Along with good economic data this week, this suggests financial conditions are stabilizing—which is a good sign for the markets going forward.

I’ll have more to say tomorrow when I am caught up. Have a great day!

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