Is the weakening dollar beginning to weigh on Treasury prices? Even though foreign ownership of the US Treasury has declined dramatically over the last 10 years [declining from 34% in 2014 to 23% today], foreigners still own about $8.3 trillion of our debt. Japan is now the largest owner of US debt according to Barrons. … Read more
For the third consecutive month inflation rose less than expected, suggesting little urgency so far by companies to pass along the cost of higher tariffs to consumers. Are companies absorbing the costs hence eroding margins? Margin or earnings erosion was not evident in first quarter profit reports. According to Bloomberg, 77% of S & P … Read more
Equites rallied amid a reprieve in the trade war between the US and China with hopes for a broader agreement in the intermediate future. The three-month lowering of import duties will give more time to negotiate a more comprehensive trade deal. While the agreement is only temporary, a framework for continued discussion may have been … Read more
It is almost a universal belief that tariffs will increase prices. A major question at hand, after this initial spike, will inflation become persistent? It is also a near universal belief that tariffs will produce a related supply-side “disturbance” that may suppress output and employment. The Federal Reserve is in an incredibly difficult spot. Most … Read more
Is the Treasury Department/Federal Reserve concerned that the yield curve could become “unglued?” In recent Congressional Testimony from Treasury Secretary Scott Bessent, Bessent stated it is “top priority” that Federal Reserve/Treasury does not lose control of the yield curve, a yield curve that has been perhaps artificially suppressed by Central Bank policies over the past … Read more
As widely expected the Federal Reserve held interest rates steady for a third straight meeting and emphasized they see a growing risk of both higher inflation and rising unemployment, stating “uncertainty about the economic outlook has increased further.” The statement is not a surprise as the President’s trade policy has unleashed a wave of uncertainty … Read more
It is widely accepted the FOMC will not alter monetary policy today. The post meeting statement will be scrutinized to the umph degree in attempt to discern monetary policy direction. The odds are high that FRB Chair Powell may state the outlook is filled with uncertainty and monetary policy decisions may continue to focus upon … Read more
The volatility and the sensationalist narrative are incredible. Two weeks ago, the financial markets were imploding and the world as we know it was going to come to an end. Two weeks later, S & P posted its longest winning streak in more than 20 years. The data is not suggesting a financial apocalypse is … Read more
The ISM Manufacturing Index surprised on the upside. The data was not as weak as forecasted and prices did not climb as much as expected. The headline number did fall by the most in five months, however it was considerably stronger than expected almost matching last month’s data. The “New Order Index” was also considerably … Read more
The economy contracted at the start of the yar for the first time since 2022 on monumental pre-tariffs import surge. Initial estimates of first quarter GDP decreased at an annualized 0.3% rate in the first quarter, well below average growth of about 3% in the prior two years. Net exports subtracted a record 5% from … Read more
