Correspondent Blog

Fed Expects 75bps in Rate Cuts in 2024 Meeting Highlights: As expected, the Fed left the fed funds target rate unchanged at 5.25% – 5.50%, matching the overwhelming market consensus.  The updated rate forecast, or dot plot, doesn’t have another rate hike penciled in for next year. In addition, 2024 rate cuts were increased from…

Cool PPI Greets Investors Before FOMC Decision A market-friendly read on PPI is boosting Treasury prices as traders await today’s FOMC decision. The cool PPI offsets some of the angst produced by the so-so CPI readings, and that has Treasury yields moving closer to recent range lows. The rally, however, will probably have a short…

A Defensive Tone Opens a Busy Week They say stocks climb a wall of worry and that could be the case for Treasuries this week as several trip wires await investors. First, the after-effects of the solid jobs report from Friday will continue to reverberate, followed by CPI tomorrow. Then it’s the FOMC meeting on…

November Jobs Report Stronger Than Expected Nonfarm payroll gains came in better than expected with 199 thousand new jobs vs. 185 thousand expected. Private sector jobs increased  by 150 thousand vs. 160 thousand expected. Revisions have been trending to the downside this year and that held true for this report with 35 thousand jobs cut…

ADP Employment Report Hints At Ebbing Labor Market Momentum After meandering in the red in early trading Treasuries are finding a bid once again after a soft ADP Employment Report hinted that the labor market is increasingly feeling the strains of the Fed’s rate-hiking campaign which plays into the market’s aggressive 2024 rate-cutting expectations (more…

Treasuries Open in the Red as Investors Reconsider Last Week’s Rally Treasuries are under some pressure as the week opens as investors take some gains after last week’s run, and as this week’s economic releases are expected to show no dramatic slowing in the economy. Presently, the 10yr Treasury is yielding 4.26%, down 16/32nds in…

Dovish Fed Comments Spark Treasury Rally Investors liked what they heard yesterday from the Fed, particularly Fed Governor Christopher Waller (more on that below). Those good feelings that rate cuts could be coming earlier in 2024 than previously thought continue to reverberate this morning, along with an upwardly revised 3rd quarter GDP estimate that saw…

Risk-Off Tone Greets Investors Treasuries are finding an early bid as weak economic results from China overnight point not only to the ongoing troubles in the second largest economy but also to a general slowing in the global economy.  Meanwhile, 2yr and 5yr Treasury auctions today will likely keep any rallies on a short leash….

Treasury Yields Press Against Resistance Despite a 10yr TIPs auction that didn’t go great yesterday Treasuries this morning are extending gains and hitting two-month low yields. Also helping the pre-Thanksgiving trade were Fed minutes that really didn’t offer up any surprises (more on that below), and the market took that as a bit of relief….

Sparse Data Awaits Investors During This Holiday-Shortened Week Treasuries are trading a bit heavy this morning as the upcoming Thanksgiving holiday has investors distracted and disinterested so many are sitting on their hands for now. Additional supply this week (20yr and 10yr TIPs) is also contributing to some reluctance on the part of traders as…

Is the Labor Market Finally Starting to Weaken? Treasuries open the day with a slight downside bias and that may be the case for a while as the Thanksgiving holiday beckons next week, and first-tier data will be few and far between for the next two weeks (more on that below). Presently, the 10yr Treasury…

October PPI Confirms CPI With a Softer Read on Wholesale Inflation Treasuries are giving back some of the outsized gains from yesterday, despite more good news on inflation. Prices were drifting lower into the PPI and retail sales releases and that picked up as retail sales, while easing in October, were revised higher in September…