Weekly Market Update

Plenty of Fed Speak This Week After Soft Jobs Report The return of geopolitical risk is adding to the rally in Treasuries that started after Friday’s softer employment report and that has yields dipping farther in response. Israel has told civilians to leave the Rafah area of Gaza as an attack in the area seems…

April Employment Report Hints at Some Softness Nonfarm payroll gains for April were 175 thousand vs. 244 thousand expected and 315 thousand in March (revised up from an initial 303 thousand). Meanwhile, February was revised lower by 34 thousand jobs, and that continues a year-long trend of downward two-month revisions.  Private sector jobs increased 167…

Meeting Highlights  As expected, the Fed kept the funds rate range unchanged at 5.25% – 5.50% and Powell’s comments were less hawkish than was expected, but there was disappointment expressed regarding the inflation news so far in 2024. This was acknowledged in the statement with this new addition: “In recent months, there has been a…

FOMC is the Main Entrée, but Plenty of Hors D’oeuvres Await Investors Treasuries are trading in the green this morning, but that’s all subject to what the FOMC statement and press conference provide. While the expectation is for a hawkish Powell and QT tapering information, there is always the risk something unexpected is said, although…

Investors Brace for FOMC and April Jobs Report Treasuries are trading in the green this morning, perhaps in recognition that Japanese officials apparently took advantage of a light volume Monday holiday to intervene in the currency market to defend then yen. It declined to 160yen/dollar overnight, then quickly improved to the low 150’s signaling the…

Inflation Progress Appears Stalled in 2024 Treasuries are breathing a sigh of relief as the March PCE inflation figures came in close to expectations, and generally in line with February, so the fear of a hot print wasn’t realized. We talk more about today’s numbers below but suffice it to say they show inflation progress…

Market Awaits, GDP, PCE, and Record 5-Year Auction Treasuries are trading weak today as the market awaits more consequential reports tomorrow and Friday in the form of first quarter GDP and March PCE. Also, the Treasury will be auctioning a record $70 billion in five-year notes today, which should keep Treasuries on the back foot…

Geo-Political Risk has Entered the Chat Again Hawkish Fed speak and military attacks have provided a host of cross-currents for the market to deal with this week. The risk-off tone that followed initial reports of Israeli strikes in Iran were eventually reversed as the attack was termed limited in scope, and the lack of follow-through…

Powell Admits the Obvious Treasury yields are finally retreating a bit, perhaps taking a breather from the recent run higher.  It could also be that with Fed Chair Powell admitting the obvious, that inflation trends haven’t been what they were hoping for this year, traders are taking some profits with that admission and awaiting the…

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…