NYSE's Michael Reinking on Record Highs, Treasury Yields and Market Outlook

In this NYSE Live interview, Michael Reinking, Senior Market Strategist at the New York Stock Exchange, discusses the market environment as equities trade near record highs and investors assess economic, monetary policy, and geopolitical developments.Reinking begins by examining the recent strength in the S&P 500 and discusses several factors supporting market performance, including improving breadth across the market, declining Treasury yields, and easing energy prices. He explains why broader participation beyond the largest stocks is an encouraging signal for market health.The interview explores seasonal market trends and the historical performance of equities during periods surrounding midterm elections. Reinking discusses how investors often evaluate these historical patterns alongside current economic and market conditions when assessing potential opportunities and risks.A major focus of the conversation is the bond market. Reinking analyzes movements in Treasury yields and explains how inflation concerns, fiscal dynamics, bond supply, and global developments have influenced fixed-income markets. He also discusses how changes in interest rates can affect broader asset classes and investor sentiment.The discussion further examines developments in the energy market, including recent fluctuations in oil prices and the role geopolitical events continue to play in shaping commodity markets and economic expectations.The interview concludes with a discussion of Federal Reserve policy and upcoming central bank communications. Reinking outlines what investors may be watching in future Fed commentary and explains how policy expectations continue to influence market behavior.Throughout the conversation, Reinking shares insights on market leadership, earnings growth, interest rates, investor sentiment, and the broader factors driving financial markets as the year progresses.Disclaimer: Informational content only. NYSE does not endorse or recommend investments, strategies, companies, products, or services discussed.

Here to talk more about it is senior market strategist at the New York Stock Exchange, Michael Ranking. Michael, welcome to the show.

All right, so S&P 500 right now, it's at 7819. Are these all-time highs, Michael?

Yeah, we're sitting pretty much right at all-time highs. We've had a pretty significant rally to start this week. You know, yesterday's, there wasn't like, you know, we couldn't quite figure out a great reason for that rally. Today, we're seeing, you know, kind of yield start to move a little bit lower, oil prices are moving lower, and we're seeing an expansion of the breadth within the market, which is something that we've wanted to see, you know, for for, you know, the last couple weeks as we've seen the equal weight version of the S&P 500, you know, close lower for about, you know, seven weeks in a row.

Do you think we potentially could see 8,000 by the end of the year?

Yeah, I mean, you know, we're we're kind of a couple percent away from that. You know, at this point, we're, you know, kind of in a pretty good seasonal time period for markets, right? So we've just came come out of September, which has historically been, you know, kind of one of the worst seasonal time periods, uh, particularly within kind of a midterm election years. And now as you move into October, November, right, those are the two best months during that time period, right? So, you know, we could still see some volatility in and around, you know, kind of a ahead of midterm elections and on kind of the back end. You know, but we are set up, you know, to uh continue to push to all-time highs.

Let's talk treasury yields. We saw them ease yesterday in uh in yesterday's session, still above uh the 10 and 30 are above 5%. What is your overall take on the treasury yields right now and how they're impacting markets?

Yeah, so we actually have a little bit of a reprieve today, you know, coming out of um, you know, out of France as Le Pen had uh announced, you know, kind of some spending cuts. And so, you know, this has been a global issue, right? It's not just a US issue where we're seeing kind of, you know, yields moving higher around the globe. France has been kind of one of these pain points. You know, we're seeing yields there move pretty sharply lower, you know, kind of after that proposal overnight, and that's helping kind of the rest of the complex move a little bit lower. You know, that being said, we've had a pretty significant repricing here. Um, you know, you people are concerned about the deficits, about supply, about inflation, right? So, you know, I think at this point we're going to kind of be in a little bit of a higher for longer, uh, you know, kind of stance for for as far as we can see.

And oil prices have pulled back. Ice Brent Crude is hovering around like $98 a barrel. It was, you know, 107, you know, we're in in over 100, you know, just last month. What do you make of the oil prices?

Yeah, I mean, look, uh, you know, obviously the geopolitics are kind of very much, you know, kind of driving what we're seeing, uh, you know, kind of in, you know, kind of oil prices and and a lot of the commodity markets, you know, in general, right? Um, you know, there are some kind of, you know, suggestions that there are negotiations that are kind of happening, um, you know, kind of in the Middle East, which is, you know, kind of helping us pull back a little bit here. You know, the question is, you know, what happens, um, you know, kind of from a longer term perspective, you know, if we kind of get past midterm elections and there is no deal, right, you could start to see things kind of really begin to escalate if, you know, kind of especially, you know, if the things go the wrong way for the administration in midterm elections where they, you know, the gloves might come off so to speak, right? So, you know, we're in this kind of, you know, you know, period where you have to kind of see, you know, what happens. I think markets are a little bit like not concerned, but right, have not gotten overly negative because there is this concern that you could see kind of the taco trade or some sort of deal come to fruition ahead of midterm elections, right? And you don't want to be on the wrong side of that if we were to see kind of oil prices move, you know, kind of pretty sharply lower. So that's kind of helped keep a bid in equity markets.

Historically, what impact do mid-terms have on the markets?

Yeah, so, uh, you know, it's one of the unblemished uh statistics that are out there. So when you look at one year after mid-term elections, uh the S&P 500 has never been lower one year following that, right? So, we are, if you look at the four-year presidential cycle, Q4 of year two into Q1 and two of next year, right, that is the best three quarter performance for for equity markets, you know, within that four-year presidential cycle, right? So, generally speaking, right, that it has been, you know, kind of a positive, uh has had a positive impact, you know, kind of on markets. You can't look at these things, you know, kind of in isolation just from a calendar perspective. You know, there are a lot of things going on, but, you know, a lot of those things that we do have going on are pretty positive. You know, the and the the the main tailwind being kind of just the earnings growth that we're seeing in the market.

And uh we just have about 30 seconds left. Uh Fed minutes. I'm sure they'll be all over those when they come out on Wednesday. What are you expecting?

Yeah, look, I mean, I think, you know, we're hearing a lot from, you know, despite the fact that you're hear Kevin Warsh suggest he doesn't want forward guidance and he wants to cut back on communication. We're hearing a lot of communication from all the the the Fed, you know, kind of Fed officials over the last couple of weeks, right? We understand that everybody was pretty much on board with kind of one, you know, the the the cut that we had last time. And we're seeing pretty broad uh you know um you know pretty broad support for one additional, you know, kind of hike as we uh, you know, kind of go forward through the end of this year. So, uh, you know, I don't think there's going to necessarily be that many surprises coming out of the FOMC minutes.

All right, Michael Ranking, senior market strategist at the New York Stock Exchange. Thanks for joining us.