Weekly Market Update

Odds of a 50bp Cut Still Increasing  Treasury yields are waffling around unchanged this morning as the market awaits a Fed rate cut on Wednesday, the first since March 2020 (see graph below). The debate over 25 or 50 rages, but the 50 crowd is gathering some momentum and that is aiding Treasury bids in…

Late Financial Commentary Revives Hopes for a 50bp Cut  Treasury yields are lower this morning as the last of the week’s inflation numbers hit with August import/export prices cooler than expected, and late-breaking financial commentary that said the 25 or 50bp decision will, in fact, be a close call. So, the uncertainty is likely to…

The Sore Spots in Inflation Returned in August  Treasury yields are slightly higher this morning as August core CPI came in a bit hotter than expected, dashing hopes of a 50bps cut next week, and the usual sore spots, Owner’s Equivalent Rent and core services, returned as sore spots in August (more on that below)….

Market Rethinks Friday’s Reaction to the Jobs Report Treasury yields are grinding higher this morning as the fears Friday that a slowing jobs market may prompt a recession are given a more sober look today. A rebound in equities is occurring across the globe and stocks are opening higher here as the selling from Friday…

August Jobs Report – A Modest Rebound Signals a 25bps Rate Cut Modest improvement in the labor market from July’s disappointment, seems to argue for a 25bps rate cut later this month. August nonfarm payroll gains were 142 thousand vs. 165 thousand expected and 89 thousand in July (revised down from an initial 114 thousand)….

September Start Echoes August The Treasury market is benefiting from the risk-off start to September that is continuing again this morning. Global markets added to the risk-off tone after watching the action in the US yesterday. A plethora of employment-related reports are due every day this week so any signs of weakness will add to…

July PCE Inflation as Expected, Confirming Fed Pivot to Labor Market Mandate Treasury yields are a bit higher on the short end this morning as the Fed’s preferred inflation measure came as expected but that dented the odds of a 50bps rate cut vs. 25bps, at least until we see the August jobs report next…

More Data Points to a Slowing Labor Market The Treasury market is drifting around unchanged this morning and that should probably be the story for today as there are no economic releases of note until a 5yr Treasury auction this afternoon. That new supply may keep the market somewhat heavy, but investors are likely waiting…

Doves Take Flight at Jackson Hole The Treasury market is trading in the afterglow of Powell’s dovish pivot at Jackson Hole, and with another week of limited data it should be a rather range bound week. We talk more about the Jackson Hole revelations below but suffice it to say the rate-cutting cycle will begin…

Powell Likely to Signal Rate Cuts to Begin in September We’ve arrived at Friday with investors waiting on Powell’s Jackson Hole address at 10am ET. Not much else is on the docket today, so the stage is cleared for Powell and his comments (more on that below). Currently, the 10yr note is yielding 3.85%, down…

BLS 2023 Payroll Revisions and FOMC Minutes on Tap for Today We’ve arrived at mid-week with investors waiting on Powell’s Jackson Hole address on Friday, so the range trade remains in place. We do get, however, some important items today with the BLS payroll revisions for 2023 and the minutes from the July 31 FOMC…

Fed Communication Front and Center This Week After a week filled with inflation data, this week is light on new economic news but that leaves the stage for Fed speak and it should provide for tradable headlines. The big event in that regard will be Fed Chair Powell’s address at the Jackson Hole Economic Policy…