Weekly Market Update

Inflation Pressures Ease A softer read on inflation from the May PCE report flipped the Treasury market from losses to gains as investors were relieved that it may temper the Fed’s more aggressive rate-hiking ambitions (more on that below). Following the report 10yr notes are yielding 3.83%, up 3/32nds in price. Earlier this morning the…

Some Sources of Inflation Look to Ease Soon Treasury yields are lower as some softer inflation in Australia and Italy, along with slowing money supply growth in Europe, are feeding hopes of waning global inflation pressure. We discuss below some hints of easing inflation on these shores that may appear towards the end of the…

Treasury Yields Lower on Geo-Political Uncertainties Treasury yields open the week lower as a poor read on German business confidence has set a bond bullish tone. To be sure, the geo-political uncertainties from the coup that wasn’t a coup in Russia over the weekend have unsettled risk markets, and reports that China holiday travel spending…

Powell Makes Clear Rate Hikes Not Over Treasury prices at the longer end are trading higher as soft PMI data out of Europe have recession concerns moving to the fore once again. That action, and Powell’s second day of Capitol Hill testimony yesterday has helped the 2yr-10yr inversion to move back into triple digits. Powell…

Powell to Testify on Capitol Hill Today and Tomorrow The markets are searching for any hints on future Fed action with the Chairman set to testify later this morning before the House Financial Services Committee and then tomorrow before the Senate Banking Panel. His prepared remarks are out, and surprising no one he kept his…

Yields are Higher as Market Adjusts to Thought of More Rate Hikes Yields are higher and the 2yr-10yr spread hitting levels of inversion last seen in March as the market adjusts to the thought of more rate hikes coming from the Fed (more on that below). Currently, the 10yr is at 3.78%,  down 14/32nds in…

Fed Pauses But Raises Terminal Rate Forecast to 5.625% Meeting Highlights: For the first time in ten meetings the Fed left the fed funds target rate unchanged at 5.00% – 5.25%, matching the market consensus. However, the forecast for the terminal rate was lifted to 5.625% (5.50% – 5.75%) in a signal to investors that…

Yields are lower as a friendly PPI report this morning continues the “inflation is cooling” story. Of course, investors aren’t likely to press bets too far before this afternoon’s FOMC rate decision which we talk more about below. Currently, the 10yr is at 3.78%,  up 9/32nds in price, while the 2yr is yielding 4.61%, up…

Investors See a Hawkish Pause on the Horizon Yields open a busy week lower as investors brace for inflation numbers tomorrow and a Fed rate decision on Wednesday that still points to a pause. Prices are rallying too in the face of supply coming today in the form of $40 billion in 3yr notes and…

Calm Before the Storm? Once again, yields are higher this morning on no real fundamental information, but with coupon auctions coming next Monday and Tuesday, along with the Treasury starting to replenish its general account with large T-Bill issuance the looming supply hangs over the market. Currently, the 10yr is at 3.75%,  down 9/32nds in…

Yields Higher as Treasury Supply Looms Yields are higher this morning on no fundamental information, but as the Treasury readies to rebuild its depleted coffers the looming supply overhangs the market (more on that below). Currently, the 10yr is at 3.71%,  down 13/32nds in price, while the 2yr is yielding 4.53%, down 3/32nds in price….

Yields Higher as Jobs Report Implications Considered Yields are higher this morning as oil prices bounce on the heels of announced Saudi production cuts, and continued review of the jobs report and the implications of higher-for-longer Fed monetary policy, which has priced out some of the rate cut expectations for later this year (more on…