Waiting for the Fed

For our beach investors… drink an Old Fashioned and get paid. 1M today could be around an extra 50k in one year with less risk than trading.

These are the best rates you can find in the fixed-income markets:

• C.D.s (New Issues): 5.40% (1-year term)

• U.S. Treasury Bonds: 5.34% (6-month period)

• U.S. Treasury Zeros: 5.16% (9-month period)

• Agency/GSE: 5.87% (5-year period)

• Corporate (Aaa/AAA): 5.56% (10-year term)

• Corporate (Aa/A.A.): 5.65% (9-month period)

• Corporate (A/A): 7.01% (3-month period)

• Corporate (Baa/BBB): 11.44% (5-year period)

• Municipal (Aaa/AAA): 4.49% (9-month term)

• Municipal (Aa/AA): 4.60% (20-year term)

• Municipal (A/A): 4.55% (20-year period)

• Taxable Municipal: 5.95% (1-year period)

For our street investors… face the wall with A.I. sentiment analysis and adjust your trading for Today (June 9, 2023):

Equity market sentiment indicates a cautiously optimistic tone. S&P 500 index rallied, closing at a fresh high since mid-August 2022. IT and consumer discretionary stocks led gains, reflecting bullish sentiment. SPY, therefore, can expect to hold firm or show mild advances.

Index futures indicate a narrowly mixed start, with SPY little changed pre-market at $429.13, Nasdaq 100 futures are up by a marginal 0.08% due to Tesla's support. Tesla's shares rose over 4.5% in pre-market trading following an agreement with General Motors that led GM shares to climb about 3.50%. This rally may provide momentum to QQQ, the technology-laden index, which marginally edged up pre-market by 0.10% at $353.51.

In contrast, Pureplay charging stocks such as ChargePoint Holdings fell over 5%, reflecting the direct impact of Tesla's deal with GM on the sector. Consequently, renewable energy sector ETFs like ICLN or TAN could face some downside pressure.

Despite the positive momentum, the Fed meeting's anticipated outcome keeps traders on edge, impacting futures across indices such as Dow and R2K. Nasdaq's marginal future gain doesn't conform to the cautious sentiment, courtesy of Tesla's influence.

Benchmark 10-year Treasury note yield rose to 3.775%, affecting high-growth stocks. The rise is due to anticipation around the Federal Reserve's monetary policy decision, specifically interest rate dynamics. Current Fed fund futures suggest a 76% chance for rates to hold at the current 5%-5.25% range in the next policy meeting.

Despite the cautious outlook, the VIX dropped to fresh pre-pandemic lows at 13.53 points, implying unusually low implied volatility in the market. The decrease in VIX contradicts the notion of investors' cautious stance, creating a divergence that might need to be monitored.

The Fear & Greed index is showing "Extreme Greed," consistent with the rise in major indices. The divergence between the VIX and Fear & Greed Index can be attributed to the influence of large-cap technology stocks recently hitting new highs, skewing overall market sentiment.

As a key highlight, seven major technology stocks including Alphabet, Apple, Microsoft, Amazon, Meta, Nvidia, and Tesla are significant contributors to the S&P 500's gain this year, showcasing concentrated market performance. The rising optimism around AI has played a vital role in the rally.

The absence of economic data today offers limited cues to traders. Investors await earnings results from NIO Inc., which lost about 3% following the release of its quarterly results. The auto sector ETFs, such as CARZ, could witness some volatility due to these updates.

After posting positive quarterly results, DocuSign saw its shares climb over 7%, potentially impacting Cloud Computing and software sector ETFs, like SKYY and IGV.

Finally, commodities show crude oil futures climbed 0.21% to $71.50 a barrel, potentially influencing energy sector ETFs like XLE and OIH. Additionally, weaker-than-expected results for Vail Resorts could negatively impact the consumer discretionary sector.