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
Tomorrow after the close NVDA posts results. The company is worth approximately $4.3 trillion or about 8% of the S & P 500. It is arguably the most important company in the indices and its performance can greatly impact on the performance of global ETFs. As noted last week according to Reuters, approximately 60% of … Read more
The markets interpreted FRB Chair Powell’s market as “decisively dovish,” all but cementing an interest rate reduction at the September meeting. The S & P 500 halted a five-day decline, rising about 1.5%, two-year Treasury yields, which are more sensitive to imminent policy moves, sank about 10 bps, and Fed Fund futures are now suggesting … Read more
Will FRB Chair Powell Jackson Hole speech increase volatility? As noted the other day, there is precedence of a major change in monetary policy announced at this annual gathering. At this juncture, the market is seeking assurances that a rate cut is likely at the September meeting. The major topic of this year’s flagship event … Read more
Will tomorrow’s comments by FRB Chair Powell alter monetary policy expectations? At the time of this writing there is a 78% chance of an interest rate reduction at the September meeting and almost 50 bps of easing are discounted by year’s end. There is ample precedence of significant changes in monetary policy announced at the … Read more
The $25 billion sale of 30-year treasury yields was regarded as “weak.” Yields, however, on both the 30-year and 10-year benchmark are still lower today than at the start of the year. The 30-year was yielding around 4.81% and 10-year was yielding about 4.56% on January 2. Today the yields are 4.80% and 4.25%, respectively. … Read more
Adjectives used to describe yesterday’s $42 billion auction of the 10-year Treasury were “pretty terrible,” “poor,” and “very discouraging” given that the benchmark was “cheapened up” before the auction. Some are fearful that this is a harbinger of auctions to come given the incessant demand for monies in an environment that is unquantified for a … Read more
The US government plans to borrow $100 billion in a single Treasury debt sale this week, an amount that was unfathomable 20 years ago and exceeds previously issued guidance. This unprecedented figure showcases both the magnitude of the government’s borrowing needs and the importance of its ability to attract investors. The Treasury said it will … Read more
Optimism over monetary policy and profits was the catalyst for a moderate advance. The market is suggesting almost an 86% chance of an interest rate reduction in September and almost 50 bps of easing is now anticipated by year’s end. There is little on this week’s economic calendar that could alter this view. Regarding earnings, … Read more
July’s unemployment data was weaker than expected. Moreover, there were considerable downward revisions from prior months. With the revisions, employment growth over the last three months has averaged 35,000—the worst since the pandemic. Approximately 40% of the revision was in state and local government education payrolls. The unemployment rate rose 4.2% vs 4.1% the month … Read more
