This week has been circled on traders calendars for some time. At the end of last week, the VIX had bled back below 15 and there was some hope that with the Fed Rate decision, China negotiations and a big options expiration cycle that may Make Volatility Great Again (MVGA). Well, if that was the bar, this week was kind of a dud, at least at the S&P 500 level. The range for the week was ~1.5% until the last hour of trading. Given the magnitude of the aforementioned rally and high expectations for the Federal Reserve to embark upon a rate cutting cycle there was building concern that there could be a sell-the-news response. That also did not come to fruition with both the S&P 500 and Dow Jones Industrial Average ending the week up ~1% around all-time highs. As we’ve seen in fits and starts over the last month small caps, which are the biggest beneficiaries of a lower interest rate environment, outperformed ending the week up nearly 3%. In fact, this week the Russell 2k finally broke above its post-election high and hit its first new all-time high since November of 2021. For another perspective, the S&P 500 is up just under 40% from the high it hit about two months later. Moving to the main event this week, the Fed meeting, despite some of the personal drama coming in, was pretty status quo. There is some interesting activity happening beneath the surface with the most discernible change being the reach for beta/risk. As mentioned above small-caps have outperformed. President Trump’s trip to the UK has ignited sharp rallies in quantum and nuclear stocks while crypto related companies continue to moon. Within the S&P 500 the 6 of 11 sectors are higher for the week with yield- oriented and defensive sectors underperforming. Despite the 25bp cut by the Fed, treasury yields rose with the curve steepening modestly. Powell's commentary was not as dovish as it could have been, there was only dissenter and yields had moved appreciably lower over the past few weeks. For next week, flash PMIs , final GDP revisions and PCE will be the biggest pieces of economic data, along with weekly jobless claims. The Fed's blackout window ends, unleashing a wave of Fed Speak. In particular, Stephen Miran, fresh off his first, dissenting vote as Fed governor, will provide his economic and policy outlook on Monday. Powell will speak on Tuesday. Earnings will include Micron, Costco, KB Homes, Accenture and AutoZone. Flash PMIs (Tues), final GDP revision (Thrs) and PCE (Friday) will be the biggest pieces of economic data, along with weekly jobless claims. The Fed's blackout window ends, unleashing a wave of Fed Speak. In particular, Stephen Miran, fresh off his first, dissenting vote as Fed governor, will provide his economic and policy outlook on Monday. Powell will speak on Tuesday. Earnings will include Micron, Costco, KB Homes, Accenture and AutoZone. There will also be a good amount of global government paper auctioned which could impact yields. Have a great weekend!

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