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Midcycle Adjustment? November 8th, 2019 by John Gross

After cutting the Fed Funds target rate for the 3rd time this year to 1.50%, the Federal Reserve implied that it’s ‘Midcourse Correction’ was complete.

But we wonder if we are seeing other corrections now, or potential changes in trends.

Treasury yields climbed last week, with the 10 year up 20 points, and putting it 27 points over the 2 year. Also, although the dollar had eased over the past two months, it held a key support line, and now looks to be resuming its rising trend.

Nevertheless, equity markets continued rising, with the DJI and S&P 500 closing at record highs on Friday.

Conversely, however, precious metals were punished unmercifully, with silver falling $1.22 on the week; gold down $47; platinum off $61, and palladium giving up $76.

Adding more confusion to the mix, it was said / suggested earlier in the week that the U.S. and China were making progress on Phase I of a trade deal, with both sides agreeing to reduce some tariffs.

By Friday though, that assumption went out the window, when President Trump said “I haven’t agreed to anything”.

What are we to make of all this?

Regards,
John


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