Halyard’s Weekly Wrap
our thoughts on the past week’s market activity, economic releases, and Federal Reserve commentary
09/19/25 – FOMC Delivered as Expected…Remains Dovish
This week the FOMC delivered the 25-basis point rate cut that everyone was expecting. In his press conference Chairman Powell mentioned that he thought that the jobs growth rate had fallen as a significant reason for the cut. One of more astute reporters asked what the Chairman thought the monthly breakeven rate is currently. Powell pointed out that it’s difficult to offer a precise level. He said it could be zero or it could be 50,000, but he added that with a declining workforce it’s certainly fallen from the 200,000 breakeven estimate not long ago. That’s sensible given the slowing that we’ve seen in job growth, but it’s not entirely borne out by the facts. According to the BLS, the labor force has not shrunk. It stands at 171 million people, just shy of the peak touched earlier this year. Nevertheless, the jobs market has clearly slowed and we think the committee was justified in their move.
The “dot plot” forecast indicates 2 more rate cuts this year. We expect a 25-basis point cut at each of the next two meetings. In addition to the cut, the committee lowered their year-end rate forecast for the next two years.
Despite the rate cut, the 2-year note closed the week 2 basis points higher, while the S&P 500 continued to rise to new highs, as does the price of gold.
As a side note, newly installed Fed Governor Stephen Miran dissented from the rate decision, instead voting for a 50-basis point cut. Separately, he has said that he would like to see the overnight rate fall below 3% by the end of this year. Outside of some unforeseen financial calamity, we see that as highly unlikely.
Next week is loaded with secondary data including home sales, Q2 GDP revision, and durable goods orders, as well as the Fed’s preferred inflation measure – Core PCE. An upside surprise to the monthly estimate PCE of +0.2% or the year over year estimate of 2.9% may cause some upward pressure on interest rates.
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.
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Halyard’s Weekly Wrap – 8/2/24
/in Weekly Wrap/by halyardWe had two closely watched events this week, the FOMC rate decision and the monthly employment report, and neither disappointed in terms of market impact. As was widely expected, the FOMC left the overnight interest rate unchanged, with Chairman Powell strongly suggesting that a rate cut would be coming at the September meeting. Throughout his post-meeting press conference, he emphasized the Fed’s dual mandate of full employment and stable inflation. We interpret that as a concern that the employment backdrop has become a worry. The employment measures this week validated that concern.
Halyard’s Weekly Wrap – 7/26/24
/in Weekly Wrap/by halyardThe data this week was decidedly mixed – although the Bond market priced in further cuts. The Philadelphia non-manufacturing index plunged to -19.1 from the 2.9 recorded last month. Similarly, the Richmond Fed manufacturing index dropped to -17 from the -10 recorded last month. As expected, there was no joy to be found in the housing sector as existing and new home sales were both down for the month.
Halyard’s Weekly Wrap – 7/19/24
/in Weekly Wrap/by halyardThere was a host of Fed speakers this week including Chair Powell before the Economic Club of Washington DC. All of them reiterated the Chairman’s testimony before congress last week that they are pleased with the cooling inflation and somewhat concerned about the jobs market. Powell added that “he’s very happy doing the job” of Fed chair and that he’ll stay in office until his term ends in May 2026.
Halyard’s Weekly Wrap – 7/12/24
/in Weekly Wrap/by halyardThe highlight of the week was FOMC Chairman Powell’s dovish testimony on Capitol Hill. In describing the dual mandate of stable jobs and low inflation he said inflation has shown “modest further progress” and that labor markets had cooled “considerably.” We interpret that as meaning that a rate cut has once again been moved to the front burner of the FOMC’s agenda.
Halyard’s Weekly Wrap – 7/5/24
/in Weekly Wrap/by halyardToday caps off a holiday shortened week in the US that saw yields continue to fall across the curve. As we have been writing for quite some time, US economic data has been mixed and this week we saw a decided shift in surprises to the downside. Although, the headline Non-farm payroll number beat softened expectations – registering +206,000 for the month of June compared to the consensus of +190,000. The two-month downward revision subtracted 111,000 previously reported jobs, and private payrolls underwhelmed. The US unemployment rate now stands at 4.1% – up 0.6% from the January 2023 low of 3.4%.
Halyard’s Weekly Wrap – 6/28/24
/in Weekly Wrap/by halyardEarlier this week, the Federal Housing Finance Authority, the government regulator for Fannie Mae and Freddie Mac authorized Freddie to buy second mortgages. The intent of the agency is to make it cheaper for homeowners to tap home equity without refinancing their existing mortgage and thereby preserving the low-rate mortgages originated prior to the run up in rates. The program is an 18-month trial with Freddie authorized to buy up to $2.5 billion second mortgages. The purchases will be limited to second mortgages of $78,277 or less. Critics say that the program will be inflationary, which if it was done on a larger magnitude we would agree with, but with a $2.5 billion program cap, we doubt that will come to pass. On the other hand, it could be a slippery slope to a wider program and another government handout.