The Bull Case for Q4, Higher Rates Momentum, and Private for Longer

We take a look at what the bull case for equity markets in Q4 could be.

The Bull Case for Q4, Higher Rates Momentum, and Private for Longer

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“Do You Remember” 2022?

September was a risk-off month for markets, and October has started the same way. We’re seeing higher US Dollar and lower equity prices, both led by a strong move higher in yields.

Returns Year to date rates dollar S&P 500

The recent move higher in yields has been led by (1) the surprise decrease in the number of rate cuts the Fed expects in 2024 (2) the 2024 year-end rate forecast by the Fed being penciled higher than the neutral rate and (3) stronger than expected US Employment data – all of which means increased worries that inflation will stay higher for longer (something we covered last month), which should support the case for even higher rates.  

At this point, it would be completely reasonable for you to ask: Higher yields for longer is something we’ve heard all year though, so what’s the reason you’re once again bringing this to our attention?

The key question we’re asking ourselves right now is: with the bear narrative (higher rates, higher energy prices, higher US Dollar) so well understood, does the market believe enough of these risks are priced in, and instead of a move lower, we bounce back from here?

Consider this:

The bear narrative is well understood. At this point, we think it’s worth analyzing the bull arguments in depth as the bull squeeze could be rather violent.

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Thanks for reading through! Obviously, none of this is investment advice.

As always, we'll see you out there...

Published in: Markets
Diego Tremiterra

Co-founder and Editor-in-Chief. Covers Markets, Business, and Thematic Oversight. Currently a hedge fund Jr. PM, ex-Goldman Sachs capital markets and startup COO.

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