[5 books this morning] Selected news to read before starting work
The footsteps of a recession
Volatility has skyrocketed in the US financial market. The yield on US 2 bonds fell below the 10-year bond yield for the first time since 2022/7.
The economist Campbell Harvey, known for proving the predictability of a reverse yield recession, touched on the point that the reversal of long and short interest rates was resolved just before the past 4 recessions began, and said, “The US financial authorities will actI waited too long” he said.
Former US Federal Reserve (FRB) economist Claudia Sahm said that the United States has not yet fallen into recession, and”uncomfortably close” he said.
without overreacting
Of the US Chicago Federal ReserveGovernor Goolsbyonce again expressed the idea that the work of financial authorities is not to respond to weak employment-related data in a single month. It added that the market is far more volatile than the authorities' actions.
There are alarming indicators such as an increase in consumer payment arrears, but the Economic Specialization Bureau CNBC indicated that economic growth continues at a “fairly stable level.” “Employment figures were weaker than expected, but there is still no sign of a recession. I want to positively judge where the economy is headed.”
Suggests expansion of activities
The Rice Supply Management Association (ISM) non-manufacturing comprehensive business climate index for July was 51.4, recovering from the previous month when it was in a contraction zoneIt showed expansion of activity。
There is a possibility that it will weaken concerns that the economic slowdown will spread far and wide. Employment, orders, and business condition indices have recovered, suggesting that the service industry is growing at a moderate pace.
The employment index showed expansion for the first time since January, and is at a high level since September last year. The business condition index, which is equivalent to the production index, rose by about 5 points in July after recording a sharp drop since April 2020 in the previous month. The new order acceptance index has also returned to the expansion zone.
Pop-up buying opportunity
The JPMorgan Chase trading desk pointed out that there is a possibility that the rotation from high-tech stocks to risk assets has “almost ended.”
Buy with a pushJohn Schlegel, the person responsible for accompanying positioning intelligence, wrote in the customer report that “we are getting closer to a tactical opportunity” to enter.
However, it is said that “it is still difficult to declare 'no problem', especially with regard to high-tech stocks.” The report pointed out that when the market remains soft, defensive stocks will be the biggest beneficiaries.
Emergency interest rate cuts
The U.S. Federal Open Market Committee (FOMC) is 75 basis points (bp, 1 bp = 0.01%)Emergency interest rate cutsProfessor Jeremy Siegel of the Wharton School of the University of Pennsylvania stated that it should be implemented.
On top of that, it was appropriate to add an interest rate cut of 75 bps at the September meeting, and he said, “That's the lowest line.” Underfootswap marketThen, the probability that interest rates will be cut urgently without waiting for the next September meeting is expected to be about 15%. At an early time, about 60% was factored in.
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