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Complacency

It seems that both Fixed Income and Equity markets have entered a complacency zone, fueled by J Powell dovish comments for 2024. The VIX, considered by many the fear indicator index, is close to its lowest readings, the Dow Jones Industrial Average is at all time highs, and the S&P 500 is less than 1% away from the top mark. In the bond market, the Bloomberg U.S. aggregate for #investmentgrade bonds had its biggest 2 day drop in yields since the pandemic. This complacency is based not only in the three cuts Powell has put on the table, but on the 6 cuts the market is discounting for next year. It is precisely at moments like this where the market is on its weakest moments, where it discounts a Goldilocks scenario. Over the next two weeks we may witness a Santa Claus rally and the tax loss harvesting and window dressing for the year. The countdown for the year has started.


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