Weekly Market Update

Investors are wading through the latest personal income, spending, and inflation numbers for May with the market mostly near levels prior to the release.  The inflation numbers, particularly core, were a touch hotter-than-expected while the softer spending numbers evidenced payback for earlier tariff front-running. Incomes fell as a one-time Social Security Fairness Act payment in…

Treasuries open the trading day mixed as the geo-political temperature continues to ratchet down and that has a quiet, slightly risk-on morning developing. President Trump is in Europe meeting with NATO allies and what could have been a contentious gathering appears to be a much more congenial affair. Meanwhile, Fed Chair Powell will be back…

The weekend bombing of several Iranian nuclear facilities by the US has opened another chapter in Middle East tensions with the West, and from an economic perspective the immediate question is if Iran will close the Strait of Hormuz where about 20% of global oil flows daily. So far, the Iranian Parliament has voted to…

Meeting Highlights  As widely anticipated, the Fed held the target rate range at 4.25% – 4.50%.  The updated rate forecast, or dot plot, still has 50bps in rate cuts in 2025, same as the March and December forecasts.  However, the margin is narrower. In March, 11 of 19 participants called for two or more cuts…

Fed Governor Christopher Waller was on CNBC this morning declaring that a rate cut in July is possible. “I think we’re in the position that we could do this and as early as July. That would be my view, whether the committee would go along with it or not.” While I’ve remarked earlier not to…

Treasuries are marking time until the 2pm ET FOMC rate decision announcement, and while no rate cut is expected the Fed will deliver an updated dot plot of rate expectations along with an updated economic outlook on GDP, inflation, and unemployment. Meanwhile, geo-political events continue to influence trading with the Israel/Iran war dominating at present,…

Welcome to Fed Week, where once upon a time it was thought we would have the first rate cut of 2025 delivered this week. Well, like a hot sports prospect that doesn’t quite live up to the hype, we’re left with a meeting that will be known for the updated dot plot and perhaps not…

Welcome to Friday the 13th, where events are already unfolding in an ominous way. Overnight, Israel attacked Iranian nuclear sites, as well as military bases, and targeted high-ranking military and nuclear officials. Iran’s initial response was a limited drone attack, but both sides say there’s more to come. Oil has predictably ramped higher (+8%) and…

Treasury yields are lower following a cooler than expected May CPI report. The release defied predictions that tariff-related costs would start to be seen, but if those costs were in play, it was pretty hard to spot them. Meanwhile, the US and China have agreed to a framework to hammer out a trade deal. The…

Talks between the US and China open today in London on the tariff issue so once again the market will have those headlines to chew on as the week opens, and swirling in the background are the weekend deportation protests in LA. One wonders as the summer progresses and temperatures and tempers get more heated…

May nonfarm payrolls rose 139 thousand, narrowly beating the 126 thousand expected but slightly off the 147 thousand in April (revised down from an initial 177 thousand).  Speaking of revisions, March was also revised down by a sizeable 65 thousand jobs bringing two-month revisions lower by 95 thousand. As we seem to say every month,…

Treasury yields are lower on the heels of a disappointing ADP Employment Change Report for May which adds even more drama to the Friday BLS Nonfarm Payrolls Report. President Trump wasted no time after the release in calling for Fed Chair Powell to begin rate cuts now. So much for a quiet Wednesday! Currently, the…