Weekly Market Update

Inflation week delivered a second straight month of well-behaved prices, and while investors didn’t get too far ahead after one month of cool results in June, the follow-up was enough to move odds of a September rate hike down to just 1-in-3.  That said, we still have August inflation and payroll data to absorb before…

The first of the July inflation data arrived this morning with CPI and the results are discussed in more detail below but suffice it to say it was close to expectations which means slightly warmer than the cool June print, but it reduced odds of a September hike to 42% vs. a toss-up which it…

There will be no rest for the weary, and after a weak July jobs report attention quickly shifts to the Fed’s other mandate, inflation. The soft July employment numbers complicate the Fed’s job as the focus has been squarely on corralling inflation. Investors’ concerns were immediate after the jobs report, with odds of a September…

July nonfarm payrolls fell 23 thousand, missing the 83 thousand gain expected and below the 20 thousand gained in June (revised lower from an initial 57 thousand).  Private sector jobs, however, rose 30k, same as in June.  Two-month revisions subtracted a substantial 103 thousand jobs from previous estimates. Job gains were in the areas that…

The first of the labor-related numbers for July are starting to arrive but plenty more will populate spreadsheets between now and Friday. From what we’ve seen so far, and think will continue, the labor market remains in decent shape with supply and demand roughly in balance. That will give the Fed some room to focus…

After last week’s full calendar, with an FOMC meeting and the latest GDP and inflation figures, attention shifts to the full employment side of the Fed’s mandate with job-related reports. It must be said, however, that with inflation the current focus of the Fed, and clearly driving the hike/no hike bus, this week’s data flow…

A week that saw a controversial FOMC meeting followed by first-tier economic releases finally comes to an end. First, the FOMC meeting concluded with an almost identical statement as the June meeting and coming after a pickup in Middle East hostilities and increased oil prices, that surprised most investors. It’s no secret that Fed Chair…

Meeting Highlights The Fed left the funds rate unchanged at its target rate range of 3.50% – 3.75%.  While odds of a rate hike never moved over 50%, there was still some uncertainty given the lack of forward guidance under the Warsh-led Fed. It would have been a big lift to get the necessary votes…

The Fed will render a rate decision at 2pm ET and the market odds of a hike sit at 36%. While that may seem low, it’s not low enough to remove all doubt. With a more vocal Fed of recent vintage, market expectations usually aligned by decision day with Fed action. New Fed Chair Warsh…

After last week’s slow grind higher in yields, the FOMC will highlight a busy week with a rate decision on Wednesday. While expectations are that the Fed will pause and perhaps tee-up a rate hike for the September meeting, new Fed Chair Warsh has shown a willingness to throw convention to the side, so there…

The story this week has been the upward move in interest rates, with most tenors setting yearly highs, and it’s not just a domestic story, as global yields are moving in the same direction (see graph below). There’s a grab bag of reasons for the move and we’ll dive into some of them below.  In…

We mentioned on Monday, with the Fed in its pre-FOMC meeting blackout and a gap in meaningful economic releases, that we’re stuck focusing on Middle East developments and that has certainly been the case. The market continues to treat the escalation of attacks between Iran and the U.S. and rumors that the Houthi militia may…