Weekly Market Update

Geopolitical Risk Comes off the Boil, for Now With the worse-case scenario in the Israel/Iran conflict not happening over the weekend, Treasuries are under early pressure and the strong retail sales numbers for March (more on that below) are contributing to the selling pressure. Of course, the last chapter in the Israel/Iran issue is a…

Geopolitical Risk Overrides Inflation Concerns For Now Increased geopolitical risk is providing a reprieve to higher yields this morning as flight-to-safety trades are the flavor of the day as the weekend looms. This may be just a brief respite, however, before inflation angst returns  (more on that below). Currently, the 10yr is yielding 4.49%, down…

Well, That Escalated Quickly Another hot inflation report in 2024 has Treasury yields moving to new year-to-date highs as thoughts of a June rate cut, and multiple 2024 cuts, get dialed way back. We delve deeper into the CPI numbers below and while we could wave off some of the worst, it will still present…

Inflation Week Opens and Substantial Improvement Appears Daunting With the worst of geopolitical fears not being realized over the weekend, Treasuries find themselves on the back foot as trading opens for the week that will be headlined by the March CPI numbers on Wednesday. Currently, the 10yr is yielding 4.43%, down 6/32nds in price while…

February PCE Signals Some Softening in Inflation From January The markets are closed today for Good Friday but that doesn’t mean the data flow stops. The February Personal Income and Spending Report was released this morning with the all-important PCE inflation series, the Fed’s preferred price measure.   February PCE inflation rose 0.3% (0.33% unrounded)…

The Range Trade Continues for Treasuries Treasuries are in the green this morning, but the trading remains rangebound as the lack of market-moving catalysts keep traders quiet as they await the long Easter weekend. The market does have to contend with more supply today as $43 billion in 7yr notes are auctioned, but yesterday’s strong…

Treasuries Trading Heavy as New Supply Looms Treasuries open the holiday-shortened week on the back step as additional coupon supply will be auctioned today, tomorrow, and Wednesday and that should keep any rally attempts on a short leash. Presently, the 10yr Treasury is yielding 4.24%, down 10/32nds in price while the 2yr note is yielding…

A Dovish Pause, But Perhaps Not That Dovish With no new data on tap today, it gives us more time to pick over the FOMC meeting, and what we learned, and what we didn’t. First, the market took the Fed’s continued forecast of three rate cuts this year as a dovish signal and so stocks…

Meeting Highlights As expected, the Fed left the fed funds target rate unchanged at 5.25% – 5.50%, matching the market consensus.  The updated 2024 rate forecast, or dot plot, also was unchanged from December with three rate cuts expected in 2024. There was a lot of talk that it could be reduced to two cuts…

Fed Day Arrives Treasuries are trading mostly unchanged this morning with the FOMC rate decision looming this afternoon. We expect that will be the case until the 2pm ET announcement and press conference fill-in some information gaps related to Fed policy (more on that below). Presently, the 10yr Treasury is yielding 4.29%, while the 2yr…

Risk-On Tone Opens Fed Week After a short period of consolidation, tech stocks are getting a second wind this morning and that risk-on tone has Treasuries on the defensive as Fed Week begins. So far, yields remain below year-to-date highs, but they are within shooting distance (see graph below). The FOMC meeting will go a…

Inflation Data Keeps Treasuries Under Pressure Treasury yields are moving higher as investors absorb all the inflation data this week that has tended to be on the hot side. That has investors revisiting odds of a June rate cut which a week ago were more than 60%, but now it’s closer to a coin-toss. Other…