Latest on the Fed (as of 5/4) Expectations are for the Fed to raise short-term rates by 0.50% and announce an aggressive path for reducing its $9 trillion war chest of Treasury and mortgage bonds. While the Fed will likely not disappoint on either front, investors will need to contend with how to build in… Read more »
The yield curve will continue to flatten and invert as investors come to grips with the reality of aggressive Fed tightening and slowing economic growth. Yields will rise and remain elevated until inflation abates. Russian aggression is here to stay. Russia is attacking Ukraine militarily and conducting cyber attacks globally. Have you noticed increasing computer… Read more »
This afternoon, the Fed will announce its latest policy decisions. It seems everyone agrees that there is little the Fed can do to bring desperately needed workers back into the workforce to solve the supply shortage causing much of the steadily rising inflation. Printing less money by no longer buying treasuries and mortgages, raising interest… Read more »
The Fed has cried wolf as it relates to tapering their bond purchases, but this time we believe we will finally hear detailed plans for reducing their $120 billion a month buying program. Our confidence stems from Jay Powell’s reappointment in February. It serves as a lock, given Janet Yellen’s continued support of Powell. We… Read more »
The Fed is stuck between a rock and a hard place. They are responsible for maintaining stable prices and yet are somewhat powerless to affect the supply chain and labor shortage-induced inflation pressures with monetary policy. While it could certainly be argued that printing $120 billion a month with inflation pressures mounting is akin to… Read more »
I would think most bond investors see treasuries as in a bubble. Even the lowest inflation predictions are higher than the current 1.28% yield on the 10-year maturity U.S. Treasury, and yet, the bubble is likely to persist until both 1) the Fed stops injecting $120 billion into the financial system and 2) the savings… Read more »
Only 266,000 jobs were created last month instead of the million expected for the second largest miss in history (March 2020 being the worst). The unemployment rate actually rose from 6.0% to 6.1% instead of declining to 5.8% as expected. However, labor force participation inched up from 61.5% to 61.7% and the underemployment rate actually… Read more »
We are transitioning from “expectations” of a strong economic impact from the combinations of a high savings rate and pent up consumer demand to the incredible reality of just how powerful the rebound is. Given the significant rebound in retail sales, it makes sense that the Empire Manufacturing and Philly Fed Business Outlook crushed the… Read more »
We expect the Federal Reserve to stay very dovish. Despite the promise of a better tomorrow with vaccines rapidly being deployed across the country, the Fed will continue to do everything possible to support financial markets. We expect them to err on the side of waiting too long to pull back on bond purchases and… Read more »
Spreading shutdowns following the spreading virus caused employment gains to take a pause. While normally 245,000 jobs in November would be something to cheer about, expectations were for 460,000 jobs making today’s data a disappointment. Next month we could have job losses as shutdowns and growing fatalities continue to take its toll on the country…. Read more »
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