🍟Indigestion in markets persist🕹

The equity market continued to be hit by a persistent downward trend as S&P 500 hit yet another closing low. There is growing worried among traders as bond yields, and the dollar might resume their uptrend movement. 

Apple’s weakness adds pressure to the risk-on mood as Bank of America drops its rating on the stock on the backdrop of a possible profit forecast drop. Waning consumer demand for iPhone is the straw to tip investors’ nerves. 

💰UK’s bond purchase in doubt💸

The Bank of England’s bond purchase program has doubts in the market, given that most investors do not expect it to last too long. As long as the global trend of inflation and rate hikes cycles continue, the UK is unlikely to be able to buck the trend. 

Indeed, the 10-year gilt yield rose to 4.142%, although below the high of 4.6%. Similarly, we are seeing the 10-year Treasury yield rise to 3.75% on Thursday, a small distance from the current peak of 3.9%. 

💎US mortgage rate rose sharply🔑

The rate has hit a 15-year high as market participants expect the Fed’s aggressive and hawkish stance. The 30-year fixed mortgage reached 6.7% on Thursday, a high since July 2007. In perspective, the rate has more than x2 over the year as tightening monetary policy hit financial conditions. 

The housing market is experiencing a slowdown after the purchase frenzy mode seen during the pandemic. There is also a projection of lower home sales and price level projection for the coming year to account for the rising mortgage rate. 

📮What’s on the menu today?📖

It is yet another important day for the equity market. 

At 8.30 pm, we will receive the Core PCE Price Index, which is expected to creep up to 4.7% from 4.6% in the prior period. The market is obsessed with any economic data determining whether inflation is moderating.

FOMC member Barkin will also speak at the same time. 

At 9.45 pm, we will receive the Chicago PMI for September. This is followed by Michigan’s 5-Year Inflation expectation at 10 pm.