Question of the Week

What rate action do you prefer?

No cuts
25bps cut
50 bps cut
Powell Resigns

Major indices are retreating as investors await tomorrow’s FOMC meeting.

The Magnificent Seven are split; however, Tesla (TSLA) continues to build on its recent rally, while Amazon (AMZN) trades higher after announcing the return of its Prime Big Deals Day on October 7-8.

Four sectors are in the green, Energy (XLE) is in the lead and getting a boost from oil prices. Meanwhile, Utilities (XLU) is the laggard.

US Treasury bond volatility (MOVE) has moved to its lowest level in 3 years ahead of the FOMC meeting tomorrow.

Main Street is looking for a rate cut tomorrow to provide much needed relief. The most recent delinquencies report for student loans and mortgages (bottom chart) showed a notable move higher this year.

In addition, US credit card delinquency rates hit a 14-year high, showing the share of balances 90+ days delinquency climbing near historic peaks.

Economic Data

The NAHB Housing Market Index was flat at 32 in September, missing expectations of 33. While Current sales conditions remained flat, and sales expectations for the next 6 months rose to 45 from 43, buyer dropped to 21 from 22.

Industrial Production increased 0.1% M/M in August from a 0.4% decline in July, beating expectations of a 0.1% decline. Manufacturing Output rose 0.2% from a 0.1% fall in July and ahead of a forecasted 0.2% drop.

Notable Points:

• Mining output rose 0.9%
• Utilities index fell 2% (0.2% increase in natural gas utilities and a 2.3% decline in electrical utilities)
• Capacity utilization remained at 77.4%

The Atlanta Fed’s Q3 GDP nowcast was revised up to 3.4% M/M from last week’s 3.1% M/M, driven by this morning’s retail sales results, which tracked toward its strongest reading since Q4 last year.

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