On this week’s episode of Tape Talk, Quint and Daniel review the Federal Reserve’s recent rate cut, drama in overnight lending markets, and the firm’s recent equity position rebalancing.
The FOMC met this week and, as expected, lowered interest rates by 0.25%. The market’s reaction was fairly muted as this move was pretty well baked in to both equity and bond prices. Further, Fed Chair Powell didn’t do anything in the Fed’s post-decision press conference to shake investors confidence for the future.
Overnight lending, however, is in the spotlight this week as the cost to borrow cash in the “repo market” spiked multiple times throughout the week. This particular market is critical for the healthy functioning banking system to move liquidity where it is needed. While the developments here are noteworthy and somewhat concerning, they don’t necessarily indicate a definite disaster on the horizon and, therefore, the market has hardly reacted so far.
Art of Rebalancing
With major US stock indices essentially at highs, Quint reviews Joule Financial’s decision to rebalance its equity positions in an effort to take profits on what has been doing well and allocate some funds to areas that may have become underweight.