Investors are mostly sitting on their hands as they await key news out of Washington. Equities are flat along with crude oil and Bitcoin. Gold is rising, as is the dollar.
It’s “Fed Day” today, with the Federal Reserve set to announce its latest interest rate decision this afternoon. Policymakers will almost certainly NOT cut rates. But we COULD see two Fed governors (Christopher Waller and Michelle Bowman) cast dissenting votes in favor of cuts. That hasn’t happened in 32 years! Both were appointed by President Trump and both have indicated they’re inclined to resume rate cuts.
Chairman Jay Powell hasn’t signaled a similar willingness to move despite intense pressure from Trump and his allies in Washington. Heading into the conclusion of this meeting, however, rate futures markets are pricing in a 65% chance the Fed WILL cut by a quarter of a percentage point at its September gathering.
TLT, JNK, LQD (YTD % Change)
Data by YCharts
Meanwhile, in the fixed-income space, riskier bonds have been outperforming US Treasuries. While the iShares 20+ Year Treasury Bond ETF (TLT) has delivered a total return of 2.1% year-to-date, the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has returned about 4.8%. The higher-risk SPDR Bloomberg High Yield Bond ETF (JNK) is up about 5%.
In other news, private fund-raisings at eye-popping valuations continue in the technology arena. The fintech company Ramp, which offers corporate credit cards and payment services, just scooped up $500 million at a $22.5 billion valuation. Meanwhile, the Artificial Intelligence (AI) darling Anthropic is currently trying to raise up to $5 billion in fresh capital. Its new rumored valuation? Anywhere from $150 billion to $170 billion!
Speaking of the tech sector, more “Mag 7” names will be reporting earnings soon. Microsoft Corp. (MSFT) is on tap today along with Meta Platforms Inc. (META), with Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) set to follow Thursday. Overall, earnings from the mega-cap group are expected to rise 14% from a year ago while sales are forecast to climb 11.9%.
