Weekly Market Update

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  Surprising nobody, the Fed left the fed funds target rate unchanged at 5.25% – 5.50%.  The updated 2024 rate forecast, or dot plot, now sees one rate cut in 2024 versus three cuts in the March forecast. There was some thought it could be two cuts given today’s cooler May CPI, but with…

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…

FOMC and CPI Share This Week’s Spotlight Treasury yields are higher as they trade in sympathy with higher European yields as incumbent parties in Europe suffered weekend election losses as far-right politicians gained, and that unsettled euro markets. More Treasury supply this week will also keep Treasuries on the back foot, and of course, Wednesday’s…

May Jobs Report Beats Expectations, but With Conflicting Signals Nonfarm payroll gains for May were 272 thousand vs. 185 thousand expected and 165 thousand in April (revised down from an initial 175 thousand). March was revised lower by 5 thousand jobs, and that continues a year-long trend of downward revisions. The gain in May jobs…

Softer May Data Providing a Continuing Treasury Bid Treasuries are finding more bids as a string of softish reports so far this week have traders expecting more of the same with today’s data. ADP already reported private sector job growth below expectations, but the ISM Services report for May awaits at 10am ET. Currently, the…

May Jobs Report Headlines Busy Week of Data Treasuries are rallying in sympathy to lower bond yields in Europe as the ECB readies an expected 25bp rate cut this week, despite the latest inflation numbers that were a bit hotter-than-expected. The lack of new supply this week is probably helping bids as well, but the…

April PCE Inflation as Expected but Spending Slows Treasuries are rallying a bit after this morning’s Personal Income and Spending Report saw inflation as expected but with definite slowing in spending (more on that below). Currently, the 10yr note is yielding 4.50%, down 5bps on the day while the 2yr is yielding 4.90%, down 3bps…

New Supply Keeping Treasuries Under Pressure Treasuries are still feeling some pressure this morning after the so-so 2yr and 3yr auctions from yesterday, boosted along with the standard hawkish Fed Speak. Today offers more new supply in the form of 7yr notes so the mood may not improve until we’re past that event. Currently, the…

Don’t Count on a Slowing Economy Just Yet Treasury yields are a bit higher this morning after a better-than-expected preliminary durable goods report for April and that follows a better-than-expected S&P May PMI report yesterday. So, as questions return as to whether the economy is really slowing, yields find themselves on the back front as…