Stocks and Bonds are Now Both Right – No Recession in Sight

Recession fears are everywhere. These fears are likely overblown. Consumer economic data remains robust and the Fed has cut rates twice as manufacturing has softened. US stocks have posted robust gains. And the 3 month/10 year spread in Treasuries has uninverted.

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Odds Increase That the Fed Doesn’t Cut Rates This Week

NLP analysis of available FOMC communications suggests a much lower likelihood of a rate cut than markets expect. Economic data also implies that a data-driven FOMC would hold rates steady. Be prepared for a surprise on Wednesday.

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