Equites climbed on hopes of interest rate reductions, the result of tariffs. Cleveland Fed Bank President Beth Hammack stated that officials could move on rates as early as June “if it has clear evidence of the economy’s direction.”
Fed Governor Chrisopher Waller said “firms may begin laying off more workers if aggressive tariff levels are reinstated by the Administration,” and he would then support rate cuts in that scenario di unfolds to protect the labor market.
Treasuries rallied across the curve with the yield curve steepened nominally based on the headlines. At the time of this writing, swap contracts suggest a 60% chance of a reduction at the June meeting. Swaps have priced in about 54 bps of easing by September and around 85 bps by year’s end.
The consistency of the last five years is that the “market” has been constantly wrong in the direction of and the timing of monetary policy.
Commenting about earnings, profit reports have been generally “mixed.”
Speaking of earnings, after the close GOOG reported profits that exceeded expectations causing shares to rise about 4% premarket. Intel missed sending shares lower by 6%
Last night the foreign markets were up. London was up 0.01%, Paris up 0.34% and Frankfurt up 0.44%. China was down 0.07%, Japan up 1.90% and Hang Seng up 0.32%.
Futures are nominally lower on conflicting trade headlines and “mixed” earnings reports. The 10-year is up 7/32 to yield 4.29%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
