Weekly Market Update

June Jobs Report Reflects Some Softening in the Labor Market  Nonfarm payroll gains for June were 206 thousand vs. 190 thousand expected and 218 thousand in May (revised down from an initial 272 thousand). April was revised lower by 57 thousand jobs, bringing the two-month revisions to -111 thousand and that continues a year-long trend…

Examining Bond Portfolio Trends: Second Quarter 2024 Background Beginning in May 2012, we started tracking  portfolio trends of our bond accounting customers here at SouthState|DuncanWilliams.  At present, we account for over 130 client portfolios with a combined book value of $13.8 billion (not including SouthState Bank’s portfolio), or $106 million average per portfolio.  Twelve months…

Treasury Yields Dip on Softening Job Numbers Treasury yields are taking a breather from their post-debate climb as some softer economic numbers are increasing odds of a September rate cut (more on that below). Currently, the 10yr note is yielding 4.40%, down 3bp on the day, and the 2yr is yielding 4.73%, down 1bp on the…

Politics and Jobs Headline Holiday-Shortened Week Treasury yields are higher this morning as investors await a ton of first-tier data in this holiday-shortened week and as they attempt to handicap the impact of the latest political events, both here and abroad (more on that below). Currently, the 10yr note is yielding 4.44%, up 4bp on the…

PCE Inflation for May Comes in Cool, Keeping Alive Hopes for a September Cut The highly anticipated core PCE inflation reading for May came in at 0.1% (0.08% unrounded), matching expectations, and bringing the YoY rate down to 2.6% from 2.8%, also as expected and the lowest in three years. Meanwhile, the 3-month annualized rate…

Market Waiting on Friday’s PCE Inflation and Spending Numbers An upside surprise in Australian CPI (4.0% vs. 3.6% prior) has global sovereign yields higher and Treasuries are no exception, but some of the upward move is also consolidation of the recent rally. A 5yr note auction this afternoon ($70bn) will also weigh on the market,…

More Housing Numbers and Treasury Supply This Week Treasuries are sharply unchanged as the week opens which includes another dose of supply. 2yr ($69bn), 5yr ($70bn), and 7yr ($44bn) note auctions will take place this week which should keep any rally attempts on a short leash. Last week’s longer duration auctions were generally well received,…

More Weak Reports Yet the Fed Stays Hawkish Treasuries are heading into the weekend with slightly lower yields as European PMI’s were mostly lower than expected. Yields are near the low end of the range that has developed post-CPI and PPI. US data is due later this morning, but S&P Global preliminary June PMIs and…

Retail Sales and Plenty of Fed Speak Highlight This Week Treasuries are opening the week with higher yields as a bounty of corporate supply is providing some hedging pressure. There is also some consolidation happening after the rally that has been the story for most of June. Recall, the 10yr Treasury was yielding 4.61% back…

Maybe the Fed Would Like a Do-Over on its Latest Forecast? The cool May CPI report on Wednesday was followed by a cool PPI report yesterday, which will most likely provide a favorable PCE read later this month, and that has Treasury yields continuing to drift lower. One last inflation report came this morning, and…

Meeting Highlights  Well, the 25 or 50bps rate cut debate has been settled with the Fed cutting the funds rate by 50bps moving the target rate range to 4.75% – 5.00%.  The updated 2024 rate forecast, or dot plot, now sees nearly another 50bps in rate cuts in 2024 ending the year at 4.375%. That…

Goldilocks Inflation Report Greets the Fed A Goldilocks inflation report has Treasuries rallying as it puts a September rate cut back on the table which should be confirmed when we see the updated dot plots later this afternoon. We go into more detail below on the May CPI report but suffice it to say it…