The FOMC is expected to hold rates steady today as all attention will be focused upon the Committee’s updated economic projections…aka the dot plot.
For now, policymakers have signaled they are in a wait and see mode, seeking further progress on inflation and greater clarity on the economic impact of Trump’s policies, chief amongst them are trade tensions and tariff implementations that have introduced significant uncertainty.
The recent market volatility has been blamed on tariffs, most of which are more bluster than actual policy.
As uncertainty has mounted, Bloomberg reports trend following hedge funds…aka momentum followers, are down about 4.3% this year. This is the second worst start since 2014. Momentum investing, which buys the market winners and sells the losers, once regarded as an extremely reliable trade, has “blown up,” a typical occurrence once “everyone” is involved in the trade.
Bloomberg further reports an equities-focused momentum strategy has tumbled 21% for the four weeks through March 10, one of the fastest drawdown of its kind.
Commenting on yesterday’s market, the Magnificent Seven “slipped” another 3.1% as “buyers are scarce” for this once “irresistible cohort of companies.” The NASDAQ was down about 1.7% and the Dow 0.6%.
Treasuries were essentially unchanged even though the data was stronger than expected.
Last night the foreign markets were down. London was down 0.22%, Paris up 0.21% and Frankfurt down 0.54%. China was down 0.10%, Japan down 0.25% and Hang Seng up 0.12%.
Futures are flat ahead of the open. The 10-year is up 1/32 to yield 4.28%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
