Underlying inflation rose as expected in August, keeping the Federal Reserve on track to cut interest rates next week. Even though the overall CPI rose more than expected and is the largest monthly gain since the start of the year, the core CPI—ex food and energy—met expectations. The report suggests inflation continues to linger and … Read more
Speculation is rising to almost certainty that the Fed will lower interest rates in two weeks and again by year’s end. The two-year Treasury or the instrument most sensitive to monetary policy is around its lowest yield since 2022 and the yield curve is the steepest since early 2021. The outlook for longer dated Treasuries … Read more
The jobs data disappointed. Nonfarm payrolls increased by 22,000 versus expectations of a 75k increase. Revisions in the data indicate that employment shrank in June for the first time since 2020. Accounting for the revisions in this report, employment growth in the last three months has averaged 29,000. Payrolls growth has come under 100,000 for … Read more
Today’s employment report is expected to extend the weakest stretch of job growth since the pandemic, likely locking in a Federal Reserve interest rate cut. Non-farm payrolls are forecasted to grow by 75,000 in August, the fourth consecutive month of job growth below 100,000. The unemployment rate is seen rising to 4.3%–the highest level since … Read more
The narrative is increasing about rising sovereign debt yields. The recent increase in the 30-year Treasury mirrors similar moves in the UK and Japan, where a deepening selloff—the result of massive government spending and the lack of policies to curtail or slow this spending—has pushed borrowing cost to the highest levels of this century. The … Read more
Bloomberg asked if the US Treasury strategy of repressing bond volatility is creating the potential for an abrupt move higher, taking yields and the curve with it. Some have commented about the intense volatility, but this volatility has been within a defined range. Longer dated Treasury yields are around early year levels. The two-year Treasury … Read more
Welcome to September, historically the worst month of the year for two fundamental reasons. First, retail credit lines are fully extended ahead of the holiday season this elevating the stress within the financial system. This seasonal factor has waned in recent years however it is still an issue. Perhaps more significant, September is typically the … Read more
Yesterday was much to do about nothing. For the day NVDA’s earnings were a non-event. As shares were largely unchanged. As widely noted, earnings exceeded expectations but potentially the results or the forward-looking statements did not match the lofty expectations. Revised second quarter GDP largely met expectations, having minimal effect on the indices.. Today is … Read more
NVDA has a $4.4 trillion market capitalization and is about 8.2% of the S & P 500. These amounts are unprecedented on both the absolute and percentage basis. Some have stated that NVDA is the most important stock in the world given its potential outsized influence that a surprise can have upon the global indices. … Read more
The yield curve between the two-year and 30-year Treasury is the steepest since 2021, partially the result of the possibility that inflationary pressures may become unanchored. A strong argument can be made that if the President succeeds in jawboning/bludgeoning the Fed to lower the overnight rate, long term interest rate could go in the opposite … Read more
