Markets rally across all sectors ahead of the FOMC. Interest rate-sensitive stocks like HD, EIX, and AAPL show mixed signals, while short positions rise in anticipation of possible rate cuts.

Fed Fund futures say 66% of 50bs cut and 33% 25 bps. The FOMC has not changed rates for a year.

Because there is uncertainty in the number the market could move either way.

Last time the stock market rose by 1.58% The bonds have risen 3 times in a row.

Bonds and stocks have been rallying as the probability of 50bps cut has gone from 50 to 66%

The short position in TLT has also grown on the way up.

All the sectors that could move on the announcement have rallied recently, Discretionary, Tech, Utilities, Real Estate, Staples, Materials etc, all have had their short positions increase except Utilities and Staples which are flat.

So the market is not distinguishing between sectors here with the whole market swept away with higher prices and paradoxically higher short positions. It’s possible that this is in anticipation of the FOMC, where there is normally a diversity of strategies and opinions.

In terms of names that are interest rate sensitive we have Real Estate, BXP PSA SPG, Cyclical HD TSLA. Utilities EIX DUK, Basic Materials SHW, Technology AAPL, and Non-Cyclical AVY.

Most of the names the stock and short position are both up, showing a mixed long-short view. These names are sensitive both to short and long rates.

However in these names HD, EIX, SHW, AVY the stock is up and the borrow position is down indicating that in both markets the position is bullish for these interest rate sensitive stocks.

The market is not distinguishing between most sectors and securities, but these names which are interest rate sensitive stand out in that the stock is up and the short is down signaling a bullish sentiment.

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