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The S&P 500 fell by more than 80 bps today, driven by weak economic data this morning and growing geopolitical uncertainty. The rising wedge continues to unfold as expected, and just as today needed to be a down day, ideally tomorrow should be as well, marked by a clear break of support at 5,965. Momentum is showing signs of rolling over, with the index closing below the 10-day exponential moving average for the second time in three days—an early indication that the sell-off might be gaining traction, along with the RSI rolling over.
The HGX housing index had a rough day, falling nearly 2.5%, and now appears to be forming a potential double-top pattern. A clean break below the neckline at $610 would suggest the index could drop toward the April lows near $560. The RSI is confirming the bearish momentum as well.
Today, we saw the Treasury General Account (TGA) rise significantly due to tax receipts, increasing by $158 billion—from $288 billion on Friday to $446 billion.
SOFR rose today to 4.32%, up from 4.28% yesterday, and should continue trending higher into quarter-end. While it might not rise every day, the overall trajectory suggests a move back toward around 4.4% by the end of the quarter. Together, these factors imply that market liquidity will likely tighten further as reserve balances decline, overnight borrowing rates increase, and reverse repo activity likely accelerates.
Finally, the Fed meeting should be mostly uneventful, with the updated dot plot in the Summary of Economic Projections (SEP) providing insights into the direction of future policy. The real fireworks will likely come afterward, once the Fed announces it will hold rates steady, as President Trump is sure to quickly voice his view that Powell should have cut. At some point, Trump may name a new Fed chair—likely well before Powell’s term officially ends. It’s unclear how exactly that scenario would unfold, but it would certainly be intriguing: imagine the Fed holding rates steady in September, followed immediately by a tweet from the “shadow” Chairman stating they would have cut by 25 bps. The market reaction to such a scenario would undoubtedly be fascinating.
-Mike
TERMS BY CHATGPT
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Treasury General Account (TGA):
The U.S. government’s primary account, held at the Federal Reserve, into which tax payments and other federal receipts are deposited, and from which payments are made.
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SOFR (Secured Overnight Financing Rate):
A benchmark interest rate reflecting the cost of borrowing cash overnight secured by Treasury securities. It’s the successor to LIBOR for U.S. dollar funding.
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Reverse Repo (Reverse Repurchase Agreement):
A transaction where the Federal Reserve borrows cash from financial institutions by lending them Treasury securities, effectively absorbing liquidity from the market.
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Dot Plot:
A chart published quarterly by the Federal Reserve showing individual policymakers’ expectations for future interest rate levels.
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Summary of Economic Projections (SEP):
Quarterly publication by the Federal Reserve outlining economic forecasts, including GDP growth, unemployment, inflation, and projected interest rates.
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Shadow Chairman:
Informal term used here metaphorically to describe a hypothetical scenario where a person designated as the future Fed Chair publicly expresses their monetary policy stance before officially taking office.
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bps (basis points):
A common financial unit measuring interest rates; one basis point equals 0.01%, thus 25 bps equals 0.25%.
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
Subscribe to receive this FREE daily commentary directly in your email
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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