Q4 Outlook: Fed, Oil, Yields, AI and Earnings Converge
Markets face a convergence of Fed tightening, oil above $100, elevated Treasury yields, record stock levels and upcoming big tech earnings.
Markets are heading into a crowded fourth quarter. The Federal Reserve is expected to tighten again before year-end, while US midterm elections are roughly 45 days away. Meanwhile, crude has moved back above $100 per barrel, diesel prices are at record levels, and there is a global fuel shortage.
Treasury yields are also climbing, with the 10-year note yield above 5.00%, and the stock market is near record highs. The AI trade continues to accelerate, and earnings season is only a few weeks out; large technology companies are now investing more than $1 trillion in annual capital expenditures.
The result is a convergence of monetary policy, geopolitics, energy, elections and AI-driven capital spending over the final stretch of the year.
Source: The Kobeissi Letter