Weekly Market Update

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…

Treasuries Trade Weaker as Supply and More Inflation News Awaits Treasuries are trading weaker today as $22 billion waits to be auctioned this afternoon. After yesterday’s so-so 10yr auction discretion appears to be the better part of valor today. Also, tomorrow and Friday offer more inflation news with PPI tomorrow and Import/Export prices on Friday….

Inflation Week Arrives It’s a tentative start as Inflation Week arrives. Treasuries are trading slightly lower, and equities are continuing the selling from last Friday. With CPI, PPI, and Import/Export prices, investors will have plenty of inflation news to chew on before the FOMC meeting next week (more on that below). Presently, the 10yr Treasury…

February Jobs Report – Something for Everyone  Nonfarm payroll gains for February were 275 thousand vs. 200 thousand expected and  229 thousand in January (revised down from an initial 353 thousand). In fact, the prior two-months were revised lower by 167 thousand jobs which continues a year-long trend of downward revisions.  Private sector jobs increased…

Treasuries Rally Ahead of Powell’s Congressional Testimony With Fed Chair Powell set to testify on Capitol Hill over the next two days, investors are hoping to gain additional color around the Fed’s reaction function towards rate cuts. Alas, Powell’s opening remarks offered little change from the patient pause approach, but his comment that rate cuts…

Whether January Strength Was A Fluke Will Start To Be Answered This Week With some pivotal economic releases pending this week Treasury yields are drifting higher this morning. The February jobs report looms on Friday while the ISM Services Index is due tomorrow (more on those below). Whether January strength was due to tricky seasonal…

More Fed Speak and an Early February Inflation Number Treasuries are hovering around unchanged levels this morning as a final slate of five Fed speakers go at it today, and we get our first look at February inflation pressure, or lack thereof, in the ISM Manufacturing Survey later this morning, (more on that below).  Presently,…