Today's Post - https://bahnsen.co/3tYWGgn

So the market closed the month of October down -1.35% in the Dow, down -2.2% in the S&P, and -3.4% in the Nasdaq. Let’s just say those numbers got a lot better the last two days, though. And then today was noteworthy as well …

Fed Day is the best day, and today the Fed kept rates where they were, as expected. The market was up +100 when Powell began talking, it went up to +200, then gave that back, then went up +250, and closed just a tad below that level. More importantly, bonds rallied viciously – with each maturity from two to ten years on the treasury curve seeing yields drop over 10 basis points.

His only comments about quantitative tightening were that they were not, at this time, considering slowing down or ceasing their “run-off” of the balance sheet. The word “run-off” is key because they are not actively selling bonds – they are letting about $80 billion of bonds mature per month and not reinvesting the proceeds. This is a form of tightening, but less aggressive than some have suggested.

Bottom line – Powell was pretty clear that they know financial conditions are, themselves, doing their work for them, and while he skirted around QT it is hard to see how anyone could hear what he said today and conclude any additional rate hikes are coming.

As mentioned yesterday the rally on Monday saw 2.5 advancers for every 1 decliner, and yesterday it repeated at 2.3 to 1. A year ago when the market bottomed and a nine-month rally began the breadth of the rally was consistently above 5-to-1 and sometimes well above 10-to-1. Market participation is still too thin to feel good about things.

Links mentioned in this episode: