2022 October 12th EST Daily Memorandum
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Table of Content
Executive Summary - prior day as the anchor
Today at Close - Higher Level Overview & Analysis Based on Our Quantitative Indicators for selected Indexes & Indicator heat charts
Expectations & Analysis for Tomorrow in Detail
The thesis of interest rate hikes will continue to govern trades from the current to earlier next year. The highest projected terminal rate is expected to be around 4.51 - 4.70%. As a result, rising rate hike expectations continue to drive the underlying credit market-related indexes. The general thesis for the remaining year is outlined in the following article: Is Volcker Shock Coming Back? In light of the ECB speech, we reaffirm the position, and views presented in the following article: The stagflation debt crisis and a narrowing path for monetary policy.
We see significant downside risk to the S&P 500, NASDAQ, and Dow Jones Industrial Average and remain bullish on the credit market and reverse index as indicated in the 2022 September 27th EST Daily Memorandum for the long term.
Today, the market fluctuates and resolves technical aspects that prevent the index continue to drop. With higher-than-expected PCE and the world sliding into recession on PMI numbers, and current employment levels, it is unlikely for the monetary policy to change course. Fed has also reaffirmed it will continue to hike until reaching the target 2% interest rate.
For setup tomorrow: