U.S. stocks trimmed early-session losses by midday Monday, as investors showed limited concern after Moody's downgraded U.S. sovereign credit from Aaa to Aa1, effectively stripping the world's largest economy of its last top-tier credit rating.
Goldman Sachs strategists are calling for as much as a 20% decline in the S&P 500 index from where it trades today, and there are some signs to back this view.
A dramatic confrontation between the White House and the Federal Reserve has been put off – for now. Come Tuesday, Trump said he has “no intention” of firing Powell before his term ends.
Media outlets will remind us that the S&P 500 is down about 10%, but you may be feeling a little more angst than you think you should for a 10% correction. After all, this year has been much more challenging than your normal 10% correction.
What we see is a market that failed to be roiled by bond selling or tariff news. We found ourselves recognizing that all really is quiet on the bearish front.
One week of trading doesn’t change decades of precedent for the world’s primary “safe” asset, but reports that the global marketplace is rethinking risk for US government bonds is deeply unsettling for several reasons.
If a genuine unwinding gets underway, there is a long way to go on the downside. But it is too soon to declare that. Yes, volatility bulls were unable to cling on to the weekly highs, but there are several layers of defendable support underneath.
