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
Tomorrow is the commencement of a two-day FOMC meeting. It is widely expected the Central Bank will lower the overnight rate by another 0.25%, bringing the benchmark rate down to a range of 4.25% to 4.5%. That would mark a full percentage point of reductions since September. Rate cuts are forecasted to slow next year, … Read more
The CPI rose at a “firm” pace that met expectations, solidifying expectations for the Federal Reserve to cut interest rates next week. It is also additional evidence that the battle against inflation has stalled. The core CPI rose by 0.3% for the fourth straight month. From a year ago it rose 3.3%. The headline number … Read more
Markets were quiet unwilling to make any significant moves ahead of key inflation data released today and tomorrow. Bank America writes “the market is pricing in the smallest implied reaction to the CPI since 2021.” Consensus is expecting a 0.3% increase in both the headline and core CPI. Year over year, the CPI is forecasted … Read more
