On Friday, the United States stock went up, and investors digested the first speech by Federal Reserve Chairman Kevin Warsh at Jackson Hall. Despite a clear upturn in short-term United States debt, the General 500 index, the NASDAQ composite index plate increased by about 0.4 per cent and the Dow Jones industry average index went up in parallel.
September interest rate increase.
Warsh states that the Fed still has work to do if inflation is not “clear and fast” back to the 2 per cent target. This statement did not directly release the signal of upcoming interest rates, but reinforced the Fed ' s position to continue to suppress inflation. After the speech, the expectations of the market for the September hike rose to about 50 per cent, up from about 35 per cent before the speech.
As a result, the rate of return on short-term United States debt has increased significantly. The return on United States debt rose by 9.5 basis points to 4.32 per cent, a high of about one month;10 the annual rate of return on United States debt rose by 2.8 basis points to 4.70 per cent.
It's up in the three fingers.
At one point, the U.S. stock was close to flat. As of 10:07 a.m. U.S. time, the dots increased 0.07 per cent, reporting 53,606.27 points; the placard 500 index fell 0.07 per cent, reporting 7,725.81 points; the natex fell 0.22 per cent, reporting 26,483.33 points. This was followed by a double increase in the scale 500 and the nano-finger, indicating that investors temporarily accepted the prospect of more hawk-like interest rates.
In terms of tablets, the technology unit that had been driven by AI on the previous day had cooled. The early plate fell by about 1.3 per cent, with a daily increase in the repulsive part; Marvell Technology fell by about 7.2 per cent, and the market still questions the timing of the realization of its revenues from its collaboration with Google AI. On the other hand, PayPal fell by 11.5 per cent, and Gap rose by about 15 per cent after increasing its annual profit expectations.
The equity debt return gap remains wide
Another set of market data cited in the article points to the fact that the real payoff gap between the United States stock market and United States Treasury debt has remained historically high over the past 10 years. On a rolling 10-year, inflation-adjusted total return, the return advantage of the benchmark 500 relative to the United States debt was close to 15 percentage points, significantly above the long-term average of about 5 percentage points.
Kobeissi Letter therefore claims that the gap was the largest since the late 1950s. According to the data quoted, the average annual real return on the United States Treasury debt over the same period was about negative 3 per cent, while the average annual real return on the Standard 500 was about 12 per cent. This set of data is more reflective of the fragmentation of asset performance over the past decade and shows that the stock market remains resilient in a high interest rate environment.
Next, market concerns will shift to whether the continuation of short-end rates of return will stifle stock valuation. On a Friday basis, investors continue to weigh higher interest rate expectations, business resilience and overall stock market upward trends.