The PPI is released at 8:30. Inflationary pressures are expected to rise from the previous month, an environment that was discussed several months ago given the comparable year ago figures. Every day we are inundated with pictures from the fires in California. The fires are hardly contained. I am amazed that there have not been … Read more
December’s unemployment report was considerably stronger than expected as the economy added the most jobs since March and the unemployment rate unexpectedly fell. The data confirmed that the labor market held up last year despite higher borrowing costs, lingering inflation and political uncertainty. While demand for workers moderated and the unemployment rate rose in 2024, … Read more
Much to the surprise to many, Treasury yields have been climbing since the Federal Reserve lowered rates in September with an outsized half point move. A resilient economy and Trump’s victory less than two months later are the primary catalysts, leaving the 10-year yield more than 100 basis points higher than it was before the … Read more
Yesterday’s economic data could not have been worse for a Treasury market already under pressure as the new year began. The 30-year Treasury yield was already hitting 52-week highs before the data dump which indicated a strong economy with inflationary undertones, The 10-year premium—the additional yield demanded to hold longer dated debt–is at the highest … Read more
I belatedly welcome all to 2025. 2024 was a year few had predicted. Depending upon the source and how it is calculated, anywhere between 50% and 60% of the gain in the market was the result of the surge in the Magnificent Seven. The amount of money concentrated in these seven companies and one sector … Read more
The PCE Index, or the primary inflation indicator of the Federal Reserve, posted a nominally lower reading than expected, a print that assuaged some worries about inflation. Equities trimmed some of their weekly losses and Treasuries rallied nominally across the curve. Historically Christmas week is a positive week for all markets, albeit on low volume … Read more
President elect Trump and Elon Musk has thrown Congress into disarray as both publicly stated they will not support the Continuing Resolution (CR), threatening a government shutdown by this weekend. This begets a larger question, the effectiveness of DOGE. Today’s CR battle can be viewed as the proverbial “shot over the bow” or a very … Read more
The Federal Reserve delivered a “hawkish cut,” defined as lowering the overnight rate by 0.25% but reigned in the number of cuts they expect in 2025 to only two. This was a moderate surprise as the majority of economists in a Bloomberg survey had forecasted three cuts for the next year. Before the outcome of … Read more
The Federal Reserve announces it intended monetary policy dictum at 2:00. The markets are expecting a “hawkish cut” of 0.25% bringing the overnight target rate to a range of 4.25% to 4.5%. There are several bulge bracket firms that suggest the 10-year Treasury will yield between 5% and 6% in the intermediate future, the result … Read more
Markets are pricing over a 90% probability of a 0.25% cut in the Fed Funds rate tomorrow. There is also widespread agreement that this will be accompanied by forward guidance suggesting fewer cuts in 2025 than previously indicated. It is also expected that FRB Chair Powell will not close off his options for a January … Read more
