The S&P 500 dropped to a 110-day low as the market digested what “higher for longer” meant for stocks.

On Sept. 20, the United States Federal Reserve delivered a message that reverberated through financial markets: Interest rates are expected to remain at their highest level in over two decades, possibly for longer than most market participants’ expectations. This attitude comes against the backdrop of stubbornly high inflation — with the core inflation rate hovering at 4.2%, well above the central bank’s 2% target — and unemployment at record lows.

Notably, the 10-year Treasury yield surged to levels not seen since October 2007. This movement reflects the market’s belief that rates will continue to climb or, at the very least, that inflation will eventually catch up with the current 4.55% yield. In either case, anxiety is mounting over the Fed’s ability to sustain these elevated interest rates without destabilizing the economy.

Bitcoin does not necessarily follow traditional markets
One intriguing development amid this financial turbulence is the apparent disconnect between the S&P 500 and cryptocurrencies, particularly Bitcoin. Over the past five months, the 30-day correlation between the two assets presented no clear trend.

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Sep-28-2023 07:46:06 AM