FED in Catchup Mode…

Market interest rates made their move four months ago, market rates are down some 15 % since late April. Since then we have seen deflationary forces in AG commodities, down 8 to 10 %, while industrial metals copper, aluminum, and iron are down 7 to 10 % for the same period. Oil joined the rout with 12 % declines.

Stocks did their favorite thing when interest rates decline. During the period outlined major indexes are up 12 %, chips, REIT’s, and Biotech are up around 20 %, while transports and infrastructure plays are flat to down. So now as things are softening, the hot activity is writing AI software, and we will see how much that increases profits.

And with all this in place the FED is playing catchup. Do I hear a yawn?

See market interest rates (average of 2y+5y+10y+20y) chart with vertical red line drawn at 4/25/24.