If the stock market traded on Sundays, it would feel a lot like yesterday’s session. Plodding investors are mainly cooling their heels for today.

But small-cap names continue to celebrate the expected rate cut in advance.

Federal Reserve Policy is Still Restrictive

Fed Jay Powell & Company were late to tackle runaway inflation in 2022, finally beginning with a 25 basis point (bps) rate hike, then 50 bps, followed by four hikes of 75 bps in a row.

We have the about-face on policy, which began with a 50-bps cut when inflation readings were higher than they are now. But there is still a lot of handwringing about the need to be more accommodating. People are wondering why there haven’t been dramatic changes in yields, but there haven't been corresponding counteractions.

In Perspective

Another great chart from Bluekurtic Insights that shows that the Fed funds rate is now the most restrictive relative to inflation in 15+ years.

Fed Messaging

With that in mind, it's frustrating that long-duration yields keep coming close to pictorial declines, then turning higher. There are other issues from debt, deficit spending, and demographics influencing yields, but I think historic correlations will resume if the Fed keeps at it. That means accommodative messaging, and that will be a big question today, as everyone is talking about a “hawkish cut.”

Today’s Session

Interesting earnings and guidance reactions.

On the upside, GE Vernova (GEV) crushed it.

On the downside, JP Morgan (JPM) is under pressure after announcing higher expenses.

Meanwhile, we are all waiting for Jay Powell.  The Q&A should be riveting.