Halyard’s Weekly Wrap – 07/15/22
Front end interest rate volatility remained elevated this week, with the market adding an additional 25bps increase in Fed funds post the record CPI print – January 2023 Fed Fund futures traded at a 3.49% rate a week ago, touched a 3.74% Thursday morning only to settle back to 3.50% by Friday afternoon. The shockingly high CPI print has been tempered by softer data. Headline retail sales point to a consumer muddling along – combatting higher energy prices by buying less elsewhere. The exceptions are restaurants, a slight bounce in vehicles and strength in online shopping. Overall real retail sales have fallen two months in a row. University of Michigan surveys released Friday showed a slight uptick in sentiment following June’s abysmal readings and also a slight downtick in longer term inflation expectations. The relief rally – data dispels fears of 100bps rate rise – leaves stocks up 1.7% on the day and off just 1% for the week.
On the economic front next week the government releases housing data and S&P Global will publish purchasing managers’ surveys for services and manufacturing. Corporate earnings continue to roll in and we will be reviewing them with an eye to the state of the consumer and their ability to weather upper single digit inflation and the resultant real wage decline.
This commentary is being provided by Halyard Asset Management, L.L.C. and its affiliates (collectively “Halyard” or “we”) for informational and discussion purposes only and does not constitute, and should not be construed as, investment advice, or a recommendation with respect to the securities used, or an offer or solicitation, and is not the basis for any contract to purchase or sell any security, or other instrument, or for Halyard to enter into or arrange any type of transaction as a consequence of any information contained herein. Although the information herein has been obtained from public and private sources and data that we believe to be reliable, we make no representation as its accuracy or completeness. The views expressed herein represent the opinions of Halyard Asset Management, LLC, or any of its affiliates, and are not intended as a forecast or guarantee of future results. Past performance is not indicative of future results.
