Trading Day: Running with the bulls

On Tuesday, the S&P 500 and Nasdaq reached record highs as a temporary halt in the bond market sell-off and stable oil prices facilitated a surge in tech and artificial intelligence-related investments. Investors entered the third-quarter earnings season with optimism, as highlighted in the author's column. The piece focuses on potential warning signs in the US bond market from the Treasury's regular debt auctions, noting that while yields are rising, it may not necessarily indicate distress.

Big tails at these auctions will be closely examined by investors. Record imports in August pushed the US trade deficit to its widest in 17 months, despite efforts from the Trump administration to narrow it. While record imports signify strong consumer demand, the deficit reduces GDP growth. The Atlanta Fed's GDPNow model forecast for Q3 growth was lowered to 3.7% due to the trade data.

Oil prices remained steady around $100 per barrel, despite expectations of higher levels. The supply of crude from the Middle East is reportedly greater than anticipated, with up to 14 million barrels a day being shipped. The Federal Reserve's upcoming publication of the minutes from its September 15-16 policy meeting will be closely analyzed, as the hawkish stance following the unanimous rate hike three weeks ago might be weakening.

Several officials have suggested they are not in a hurry to raise rates again immediately. Current rates futures indicate an 80-20 chance of no change this month, as opposed to a 70-30 probability of a hike only a week ago.