Weekly Market Update

Treasury Prices Lift as December CPI Awaits on Thursday Treasuries open the week in the green as some of the luster of the jobs report has dimmed, but upcoming supply and CPI looming on Thursday could keep a lid on rallies. The Treasury will sell $52 billion of 3yr notes on Tuesday and $37 billion…

December Jobs Report Beats Expectations but with Some Noise Nonfarm payroll gains came in better than expected with 216 thousand new jobs vs. 175 thousand expected and 173 thousand in November (revised lower from an initial 199 thousand).  Private sector jobs increased  by 164 thousand vs. 130 thousand expected and 136 thousand in November. Revisions…

Investors Start the Year in a Tentative Mood The second business day of the year brings more selling across the Treasury curve as some of the sharp rally in November and December is partially reversed. Upcoming Treasury supply next week is also working against better bids, as investors start the new year in a tentative…

Inflation Numbers Continue to Improve in November This morning’s PCE inflation numbers should have been friendly for Treasuries as they came in cooler than expectations but a large pick-up in durable goods orders, led by aircraft, tempered the PCE-inspired bids. Durable goods orders for November rose 5.4%, easily beating the 2.5% forecast and that offset…

Cool Inflation Numbers Boost Treasury Prices More cool inflation reads are boosting Treasury prices this morning. First, UK CPI came in below expectations and then German PPI did the same. That builds on the bull/easing case that the improving inflation picture is becoming a broadening global story and not just US-centric. Presently, the 10yr Treasury…

Fed Officials Push Back on Aggressive Rate-Cutting Expectations A concerted effort by Fed officials to push back on the market’s aggressive rate-cutting expectations following the FOMC meeting is generating some selling in Treasuries as the last full week of the year begins (more on that below). Presently, the 10yr Treasury is yielding 3.95%, down 11/32nds…

Fed’s Dovish Pivot Resets Rates Lower The Fed’s dovish pivot on Wednesday caught the markets and almost all Fed watchers by surprise. The consensus call coming into the meeting was how much push back Powell and Company would apply to the market’s more aggressive rate-cutting expectations. Instead, the Fed moved closer to embracing the market’s…

Fed Expects 75bps in Rate Cuts in 2024 Meeting Highlights: As expected, the Fed left the fed funds target rate unchanged at 5.25% – 5.50%, matching the overwhelming market consensus.  The updated rate forecast, or dot plot, doesn’t have another rate hike penciled in for next year. In addition, 2024 rate cuts were increased from…

Cool PPI Greets Investors Before FOMC Decision A market-friendly read on PPI is boosting Treasury prices as traders await today’s FOMC decision. The cool PPI offsets some of the angst produced by the so-so CPI readings, and that has Treasury yields moving closer to recent range lows. The rally, however, will probably have a short…

A Defensive Tone Opens a Busy Week They say stocks climb a wall of worry and that could be the case for Treasuries this week as several trip wires await investors. First, the after-effects of the solid jobs report from Friday will continue to reverberate, followed by CPI tomorrow. Then it’s the FOMC meeting on…

November Jobs Report Stronger Than Expected Nonfarm payroll gains came in better than expected with 199 thousand new jobs vs. 185 thousand expected. Private sector jobs increased  by 150 thousand vs. 160 thousand expected. Revisions have been trending to the downside this year and that held true for this report with 35 thousand jobs cut…

ADP Employment Report Hints At Ebbing Labor Market Momentum After meandering in the red in early trading Treasuries are finding a bid once again after a soft ADP Employment Report hinted that the labor market is increasingly feeling the strains of the Fed’s rate-hiking campaign which plays into the market’s aggressive 2024 rate-cutting expectations (more…