US stocks slipped lower again last night as the second-guessing around the Fed’s hiking path continues and bond yields continuing to edge higher e.g. the 2-years are now trading above 3.85%. Remember we need bad news and uncertainty to create market lows which is what MM is looking for through September & October, the pivot point may be close at hand – only a month ago investors were getting bullish as stocks rallied strongly through early August.
- US inflation remains hot and interest rates may go higher than previously anticipated but the rate-sensitive tech stocks remain in the middle of their June / August trading range.
- We now see a ~75% probability that US indices break their June low but this is now less than 7% away for the NASDAQ, our focus remains on buying opportunities into such weakness.
The US yield curve inversion continues with the 2 to 30-years spread hitting levels not seen for 20 years, this is generally regarded as a great leading indicator of a looming recession. As a point of reference for Australian homeowners, mortgage rates in the US hit 6% this week for the first time in well over a decade.
MM remains bullish US equities into Christmas
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