FRB Chair Powell’s speech broke little new ground. Powell commented about the conflict of the Fed’s dual mandate (downside risks to employment and upside risks to inflation). As noted last week, Powell stated for now the labor market risks are paramount, which is why the Fed eased policy. Powell characterized the current stance of policy … Read more
Economics is about decision making and perhaps in a broad sense it appears that decisions today are being made differently than before the pandemic. Generally speaking, perhaps few fully understand how much has changed for employment, inflation, consumer behavior and more. This level of anxiety is present in almost every aspect of society. If one … Read more
The S & P 500 has gained about $15 trillion since its April lows, an advance partially predicated upon the predictions of a more docile Federal Reserve that could potentially bolster the outlook for corporate earnings. As noted last week, there is a very weak consensus of a dovish Federal as almost half of the … Read more
INTC led a rally in tech stocks sending the averages modestly higher. NVDA announced it would invest $5 billion in INTC causing shares of this beleaguered chipmaker to surge 30%, the greatest advance in four decades. Long dated Treasuries, however, sold off following the headlines that weekly jobless claims dropped the most in nearly four … Read more
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
