Rate cuts aren’t created equal.
Goldman’s data shows that when the Fed cuts outside of a recession, stocks usually surge, non-recessionary cuts have historically lifted the S&P 500 by 50%+ over two years. But if cuts arrive during a recession, the story flips. Equities struggle, with the index falling 20–30% on average. The takeaway is simple: it’s not just about cuts, it’s about the backdrop. Cuts in calm waters boost markets. Cuts in storms don’t. Source: StockMarket.news on X
Government shutdowns all have the same cause:
Congress fails to approve new spending when previous spending bills expire. But their impact can vary based on timing, duration and quirks of the budget process that can make money available to some agencies but not others. Here's what shuts down in a shutdown - Bloomberg
US government shutdowns can last weeks...
The longer the shutdown, the higher the impact on GDP Source: Bloomberg
Without tech spending, the US would have been close to, or in, a recession earlier this year:
DB's Saravelos. "Perhaps Nvidia, which employed only 36,000 people at the last update earlier this year, holds the keys to all global macro in 2026:" Source: DB, Lisa Abramowicz
A "too much growth" scare on Wall Street?
Interesting to see that yesterday's pullback was NOT prompted by bad US macro data: on the contrary, Thursday's economic number beat expectations across the board: 👉 Initial jobless claims unexpectedly tumbled to YTD lows, proving that the Texas-driven spike 2 weeks ago was indeed a one-time event... 👉 Durables goods ex-transports rose for a 5th straight month.... 👉 US Q2 GDP was unexpectedly revised sharply higher, printing at a whopping 3.8%, above all estimates, and the highest in 2 years driven by a bizarre surge in consumption - see chart below 👉US home sales were also well above expectations. In other words 4 for 4 on the data front. So much for those stagflation concerns... ‼️ But good (macro) news become bad news for the markets as the market quickly priced out odds of 2 rate cuts by December, closing the day at 1.56 rate cuts expected, down from 1.7 at the start of the day. It also pushed the 10 year yield and the greenback higher... At the time when equity valuations are extended, a rise in bond yields could indeed trigger some profit taking on US stocks Source chart: zerohedge
🚨 BREAKING:
➡️ US PCE Price Index (Aug) YoY 2.7% vs 2.7% Est PCE MoM 0.3% vs 0.3% Est ➡️US Core PCE Price Index (Aug) YoY 2.9% vs 2.9% Est (Highest PCE reading since February) MoM 0.2% vs 0.2% Est EXACTLY AS EXPECTED. BULLISH 🚀 FOR MARKETS
Maybe not a bad idea...
From Bloomberg
The Swiss National Bank is pursuing a steady monetary policy and leaving its key interest rate at 0%, which is reasonable given the current economic and political situation.
The Swiss economy is performing relatively well despite the US tariff shock, core inflation remains within a healthy range, and the ECB is also keeping key interest rates constant for the time being and is likely to continue to do so, meaning that the Swiss franc has hardly changed against the euro since the end of June. The hashtag#SNB mentions the great uncertainty surrounding the Swiss export sector, which is also the biggest question mark in our economic outlook for Switzerland at present. Should a significant deterioration manifest itself here, the SNB could come under greater pressure to lower interest rates below zero after all. The SNB's inflation forecasts also remain stable compared with the June forecast and are even rising slightly in the second quarter of 2028, which was forecast for the first time. Today's decision is therefore understandable across the board and should come as no surprise to the stock markets.
