Turim Insights

A monthly conversation with our team about markets and strategies

09 November 2023

The movement of long-term interest rate benchmarks in the United States was a highlight of this month’s Turim Insights. After a strong upward movement until the end of October, rates reversed some of the gains, reflecting signs of economic slowdown, a slightly more dovish Federal Open Market Committee (FOMC) (leaning towards interest rate cuts or maintaining rates at lower levels), and even news related to the profile of U.S. Treasury debt issuances.

The FED’s monetary policy committee kept rates steady, as widely expected, but provided a slightly more lenient communication, primarily acknowledging the tightening of monetary conditions, largely explained by the rise in interest rates. The recent dynamics slightly increase the likelihood that the committee may not need to implement a new hike in fed funds.

Moreover, several important economic indicators have shown some recent deceleration. Among these, special attention should be given to some figures related to the U.S. labor market, such as net job creation, the unemployment rate, and wage growth. All of these indicators pointed to an economy that is less heated than the market had anticipated.

This reversal in interest rates was reflected in a better performance of equities in early November, both in the U.S. stock market and domestically. Regarding this, our CIO, Fernando Verboonen, commented, “Several major indices in the U.S. stock market have already recovered from the October decline, and much of this reflects the movement in long-term U.S. interest rates.”

Also participating in the webinar were Leonardo Martins Moraes, Turim’s Co-CEO; Thiago Campos, economist at Turim, and Pedro Hokama, Head of Liquid Assets at Turim.