Stock Market Selloff: Blame the Sahm Rule, Carry Trades and Too Many Bulls

  • 📰 Investingcom
  • ⏱ Reading Time:
  • 47 sec. here
  • 5 min. at publisher
  • 📊 Quality Score:
  • News: 32%
  • Publisher: 53%

USD/JPY 뉴스

Nasdaq 100,US Dollar Index Futures,CBOE Volatility Index

Stocks Analysis by Ed Yardeni covering: USD/JPY, Nasdaq 100, US Dollar Index Futures, CBOE Volatility Index. Read Ed Yardeni's latest article on Investing.com

Last week, the stock markets’ adverse reaction to Friday’s jobs report was to price in a hard landing and toa series of federal funds rate cuts by the Fed, including a 50-basis-point cut in September. Helping to unnerve investors was that the increase in themight have triggered the Sahm Rule, implying that the jobless rate is about to soar, as it has in the past once the rule was triggered.

Show us a credit crunch, and we’ll agree that the unemployment rate is about to soar as the economy falls into a recession. The rapid unwind of carry trades injected another dose of volatility into the financial markets. Carry traders borrowing at ultralow rates in Japan effectively short the yen, borrowing and selling it to then buy other currencies of countries with higher interest rates so they can invest in those countries’ assets.

Carry trades are great until they're not. This one started to unravel in the past few weeks after Japan’s Ministry of Finance defended the currency and the BOJ subsequently started to tighten monetary policy. The risingforced carry traders to cover their shorts in the yen rapidly and to liquidate their assets that were financed by their carry trades. Many had piled into momentum stocks, including the Magnificent-7 and those in theversus more than 161.00 a few weeks ago.

이 소식을 빠르게 읽을 수 있도록 요약했습니다. 뉴스에 관심이 있으시면 여기에서 전문을 읽으실 수 있습니다. 더 많은 것을 읽으십시오:

 /  🏆 450. in KR
 

귀하의 의견에 감사드립니다. 귀하의 의견은 검토 후 게시됩니다.

대한민국 최근 뉴스, 대한민국 헤드 라인

Similar News:다른 뉴스 소스에서 수집한 이와 유사한 뉴스 기사를 읽을 수도 있습니다.

Stock market overbought, experiencing minor selloff: YardeniStock market overbought, experiencing minor selloff: Yardeni
출처: Investingcom - 🏆 450. / 53 더 많은 것을 읽으십시오 »

Stock market today: Asian stocks slip, while Australian index tracks Wall St rally to hit recordAsian stocks are mostly lower even as investors wager that the Federal Reserve will come ahead with a cut to interest rates, while Australia's benchmark hit a new record. U.S. futures fell and oil prices were little changed. The S&P 500 climbed 0.6% Tuesday to top its all-time high set last week. The Dow Jones Industrial Average leaped 1.
출처: AP - 🏆 728. / 51 더 많은 것을 읽으십시오 »

Tuberville, Alabama lawmakers blame market unrest on ‘Kamala Crash’: Why did the stock market drop?The Dow was down more than 900 points by lunchtime.
출처: aldotcom - 🏆 82. / 68 더 많은 것을 읽으십시오 »

Yardeni: Rotating market betting on pivoting PowellYardeni: Rotating market betting on pivoting Powell
출처: Investingcom - 🏆 450. / 53 더 많은 것을 읽으십시오 »