June 2019 Last month we discussed the sudden and dramatic shift in interest rate expectations given the weakness of the May jobs report. We wrote about how that was not the first undershoot this year and that previous misses have been reversed in subsequent releases. It turns out that our guess was right, as the […]
May 2019 We’re another month into the U.S.-China trade dispute and it appears that select economic data is softening somewhat. Despite that, we’re reluctant to jump to conclude that economic growth is on the verge of a recession. The most recent indicator to disappoint was the May employment report which indicated an increase of 75,000 […]
April 2019 As we’ve written for the last few years, interest rates across the yield curve are too low given the strong economic backdrop. Testament to its sustainability, the U.S. economy has continued to grow despite the behavior of politicians on both sides of the aisle and the Atlantic Ocean. The sharp drop in interest […]
March 2019 Investor perception has turned with regard to fundamental economic activity and the pricing of interest rates. The Federal Reserve has targeted the Fed Funds rate at approximately 2.42% while the yield on the 5-year Treasury note is 2.30%. That the 5-year note yields less than the overnight rate is known as an inversion […]
February 2019 It would appear that economic pundits believe that the U.S. economy is either sustainably robust or faltering and on the verge of recession. Certainly, Central Bankers around the globe are suspiciously reassuring that economic growth is just right and in case things go awry, they stand ready and able to act. Much as […]
January 2019 The January Federal Open Market Committee (FOMC) meeting yielded no rate hike and a dovish outlook for interest rates, as expected. Chairman Powell concluded this meeting with a press conference as will be the convention following every FOMC meeting going forward. The standard to date had been to have a press conference every […]
December 2018 As we expected, the Federal Reserve lifted the overnight lending rate by 25 basis points in December and indicated that they would lift rates two more times in 2019, backing away from their forecast of more frequent rate hikes. Also, as we expected, Fed Chair Powell gave a dovish assessment of the Fed’s […]
November 2018 As the fourth quarter began, the S&P 500 index sat just below an all-time high, with expectations that earnings would continue to surprise to the upside and Q4 GDP would again post 3% or greater growth. But those expectations were almost immediately dashed by a trifecta of confusing news in the form of […]
October 2018 In recognition of the strength of the economy Fed Chairman Powell delivered the most hawkish speech of any Central Banker in the last ten years on October 2nd. Speaking before the National Association of Business Economists he described the economy as operating with “limited slack” and that “the Fed would act with authority […]
September 2018 The Federal Reserve releases the value and composition of their Open Market holdings every Wednesday afternoon. These are the securities the Fed bought when, in their judgement, the economy demanded artificially low interest rates. On Wednesday September 5, the value of the Open Market holdings fell below $4 trillion dollars for the first […]