Written by Shan Saeed, IQI Chief Economist

Financial Innuendos and Market Emotions. Reading between the Lines.
The markets are dancing between what we might call economic escapades and mercantile mischief. We’re seeing a landscape where the S&P 500 is climbing, electricity prices are surging, beef and industrial metals are on the rise, and even precious metals are glittering at new heights. Equities are at all-time highs while currencies are meandering in unpredictable directions. In essence, the marketplace finds itself in a convoluted state of mind, one where it’s hard to discern where the next escapade ends and the next mischief begins over the coming quarters.

And so, the entire financial market landscape has transformed dramatically in the last 17 years. We’re witnessing shifts of a magnitude not seen in a generation. There’s a palpable flip in the nature of asset classes: equities are behaving like bonds, bonds are behaving like equities, and suddenly everyone’s a daytime trader navigating this grand economic escapade. In the end, the markets are indeed in a realm of mercantile mischief, where the only certainty is that the rules are being rewritten in real time.

FED Action in September – Rate Cut and Late to the Party.
There is now a 100% chance of a September rate cut and an 8% chance that it will be 50 bps. How do US stocks perform when the Fed is cutting interest rates? Over the last 25 years, recessions or macro events have been a negative trigger for stocks, not the Fed cutting rates. The Fed usually cuts rates in response to economic weakness, but it’s often too late.

Treasury Market is Sending a Signal – Investors to Stay Awake and Agile
10-Year Treasury Yield plunges to 4.1%, its lowest level in 5 months. Convoluted

Gold Market Outlook – Yellow Metals Shine in the Market
On 20 January 1980, gold reached $850 per ounce – equivalent to $3,590 in today’s dollars – during one of the most turbulent periods in U.S. economic history, marked by a collapsing currency, runaway inflation, and recession. Today, with gold trading around $3,650 per ounce, it has surpassed that milestone and is up 39% year to date. With rate cuts on the horizon and inflation showing little sign of slowing, the bull market for gold and other hard assets appears far from over.