NYSE Market Strategist Eric Criscuolo Dissects Latest Treasury Yield Movement

NYSE Market Strategist Eric Criscuolo joins Kristen Scholer on NYSE Live to discuss the latest treasury yield movement

And joining me now with more in studio is Eric Crisco, he's market strategist at the New York Stock Exchange. Eric, great to see you.

Same here, Kristen. Good morning.

How is the quarter looking as we're set to finish the third quarter today?

Yeah, it's amazing that we're at the end of the third quarter. Um, it's actually considering what yields did, um, this this past uh these past couple of months, uh rising rapidly to, you know, levels we haven't seen in in decades. Um, not bad. Equities anyway. Um, we're looking at about a flat month in September and we're looking about at a at a slightly positive uh third quarter uh for the S&P 500. So, despite everything, despite that rapid rise in yields, um equities kind of held in there. Kind of impressive.

A lot of data out this morning. We had a guest on earlier, an economist calling it a Goldilock scenario. Do you agree?

Yeah, I mean, and you saw the reaction in the markets as well that kind of highlight that. Um, you know, PCE coming down, still elevated, but coming down. That's the Fed's preferred measure of inflation. Um so seeing that tick lower, cooling off, that's obviously good for the Fed's goal, um showing that maybe there don't need to be as many rate hikes as um participants were thinking. We'll see about that, but it's a good sign that inflation continues to come down. GDP, the growth, the economic growth, that was revised higher on strong consumer spending. So, the economy doing well, overall, that's the GDP number, the inflation numbers ticking lower, still high, but ticking lower, on their way back hopefully to the Fed's target rate. I would agree with that Goldilocks scenario.

And what does this mean about the path forward for interest rates? We did see the Fed raise rates in September.

Yeah, so the Fed raised rates in September. There was a lot of hawkish commentary coming out of that meeting as well, um when the Fed officials start talking again after the blackout period, um that kind of pointed to more uh more rate hikes in the future. Um, but then yesterday Fed President Williams came out and kind of tempered things a little bit. Uh said maybe we don't have to hike as much as we have to. Um, and then the PCE number again coming down, you saw the markets um pricing in their expectations of a Fed hike in October, the next Fed meeting, that's actually um coming down. So the expectations are moving down, moving lower after this cool PCE print. So maybe we don't need as many hikes as as as they said. We don't know.

Where are we at in the overall economic cycle and how could that inform where we go from here?

I mean, obviously, like I said, the economy is still relatively strong as far as those GDP numbers come in. Um consumers were still spending money, um as well. Uh everything not everything. So much is predicated on that AI trade and the AI investments, right? And the huge amount of money that's being piled into construction and energy and data centers. Um so, you know, as long as that continues, the economy should continue to do well and we should and we should still be we still should be in an expansion period. Um but the question is, you know, at some point, does that construction, do does all that investment, it has to show a return on investment, right? It has to show that it's making money. Um when is that? When is that break point? When do investors finally say, show me the money? That will decide what things uh do afterwards.

Is that what is supporting the market today? still this concentrated technology/ AI trade?

Yeah, you saw so even as we said before, even with those interest rates moving higher, um the the S&P 500 was basically unchanged for, you know, one month, three months. Um that's really impressive, but the huge names, the big tech companies, uh the the mega caps, they were really doing a lot of the work, holding things up. Um the other names, the other stocks in the S&P 500 and overall, started to move lower. The average stock is actually down about 5%. Um so it's not as robust as as the headline would make it seem. Um, you know, we have we definitely have to watch what those what those other 490 names are going to do, um because obviously that is the breath of the economy, not just those those top 10, 20 tech names. uh but they've been doing a lot of the work.

We did see nearly all of the AI technology leaders standing behind President Don Trump after a summit at the White House yesterday. saying he wants to rename AI to SI. What were your takeaways from that summit?

Thank you for calling me out on that. It is definitely super intelligence, not AI. So the the technology formerly known as AI, I guess. Um yeah, I mean, AI SI, whatever you want to call it. Um it had kind of a branding issue, um where there was there's been a lot of push back about its expansion in people's personal lives, in communities, right? People don't want data centers being built in their community. So they really that group has to really do a lot of work to kind of get the public kind of back on their side. Um obviously, election season is is now well underway. uh the midterms are right around the corner. So there's going to be a lot of focus on that whole narrative. Um obviously getting everyone together, getting all the leaders together, talking about these problems, talking about the future, talking about security risks, right? I mean, um AI SI could potentially destroy humanity according to some people, right? I don't want to go that far. I'm not a tech expert. I wouldn't go that far, but just yeah, there's this public perception that really has to be worked on especially as election season comes comes around. Um but, you know, I wasn't too surprised that all these public figures, all these tech leaders were at the White House at this time with all all the news flow that's happening right now.

Yeah. All right. Eric Crisco, NYC Market strategist here with us in studio at the Stock Exchange. Eric, thanks so much.

It's always a pleasure, Kristen. Thank you.