Halyard’s Weekly Wrap
our thoughts on the past week’s market activity, economic releases, and Federal Reserve commentary
10/03/25 – US economy slows further as companies and consumers navigate headwinds.
This week, the US bond market saw Treasury yields fall, especially at the shorter end, as investors once again priced in two additional rates cuts by year end. The 10-year yield held its weekly decline amid a slowdown in economic indicators, with private payrolls dropping and services activity stalling. Robust demand for investment grade credit continued with spreads a touch tighter on the week. There have been notable red flags appearing in the high yield and asset back lending space over that past few weeks that investment grade investors are ignoring. Notably, First Brands bankruptcy – a high yield company with significant use of off-balance sheet trade financing and the Tricolor collapse – auto financing focusing on sub prime lending. Are these one-off credit issues or are they indicative of a broader credit cycle immerging within the capital markets?
Economic data released over the past week included better than expected personal spending and income levels, as well as inline PCE prices indices – Core PCE inflation was stable at 2.9% year over year. Consumer confidence and business surveys, however, broadly pointed to a further slowing in economic activity. Job data continue to point to a no fire / no hire equilibrium. The standout in Halyard’s opinion was the uptick in annualized auto sales to 16.39 million units compared to 16.07 million in the previous month. While down from the 17.7-million-unit sales in the 1st quarter of 2025, auto sales are up 4.6% year over year on a 3-month rolling average basis.
As equally sanguine as credit investors, Equity investors shrugged off the US Federal government shutdown and continued to buy – the S&P 500 is trading at yet another record level of $6,725 Friday afternoon. The release of labor statistics – usually one of the more volatile days for bond yields was delayed due to the congressional impasse on funding. Perhaps we get a release next week!
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 – 4/21/23
/in Weekly Wrap/by halyardTo put in trading desk parlance, we were “Unched” this week! That pretty well sums up trading activity. The 2-year note was 9-basis points higher in yield and the 30-year bond also drifted higher, but only by 5-basis points. The S&P 500 traded lower by less than 1%. Economic activity, for the most part, came right on the screws, with housing starts and existing home sales reports in line with forecasts.
Halyard’s Weekly Wrap – 4/14/23
/in Weekly Wrap/by halyardFollowing the Federal Reserve-induced banking crisis that gripped the capital markets last month, much debate has focused on the next course of action. Clearly, the Fed’s sharp and relentless rise in interest rates, and negligence of its regulatory responsibility contributed to the demise of Silicon Valley Bank and Signature Bank. From that, an argument can be made that they should pause from any additional rate hikes to evaluate their action to date. If for no reason other than to let any banks that extended duration too soon generate some net interest income. However, an equally persuasive argument is that the inflation mentality is starting to become entrenched. From our perspective, there were three big hurdles to overcome to justify raising rates at the next meeting, and all of them have flashed a green light for the Fed. The employment report, the consumer price index, and the producer price index all portrayed an economy that is slowing, but by no means is falling off a cliff. That should be enough to give them room for at least another 25-basis point hike.
Halyard’s Weekly Wrap – 4/7/23
/in Weekly Wrap/by halyardInterest rates continued to trend lower this week led by the intermediate sector as early economic data supported a Fed pause.
The following economic data releases supported the view that the US was nearing a recessionary environment:
• Manufacturing and Service Surveys(ISM) both came in weaker than expected and softer than the previous month
• Job openings fell to 9.9 million from a revised 10.5 million for the month of February
• Factory orders and Durable goods posted weaker readings
Halyard’s Weekly Wrap – 3/31/23
/in Weekly Wrap/by halyardThe flight to quality abated from the panic of mid-March, but there is a tremendous amount of money that has gone to cash. The Fed’s overnight reverse repo (managers lend to Fed, the Fed pays interest) attracted its 3rd highest total since inception – $2.4 trillion. Money Market Fund assets swelled to a record of $5 trillion. The dash for cash resulted in outsized moves higher in price for bonds and notes in the Front end. For example, the one month bill (4/11/23 maturity) was trading at 4.58% on March 9th – just before SVB meltdown. The same Bill (4/11s) traded as low as 3.55% on March 27th , and is now closing today at 4.77% as the worst fears of continued bank contagion have subsided.
Halyard’s Weekly Wrap – 3/24/23
/in Weekly Wrap/by halyardWe thought that the Federal Reserve would have held the overnight rate steady at the conclusion of this week’s FOMC meeting, but we were wrong! The Fed raised the overnight rate by 25 basis-points, taking the range to 4.75% to 5.00%, the ninth consecutive rate hike. In his press conference, Powell essentially said that the banking sector is fine and that markets should expect another rate increase.
Halyard’s Weekly Wrap – 3/17/23
/in Weekly Wrap/by halyardAnyone with children under 12 years-old understands the concept of the participation trophy (or has at least watched the Bluey Episode titled “Pass the Parcel”). In an effort to make sure that all participants feel good about themselves, everyone gets a trophy. For the younger kids, quite often the parents discourage keeping score or even declaring a winner. This week felt like it was trophy day for the banking system. The first trophy went to Silicon Valley bank for their mismanagement of their hold-to-maturity book, by establishing a duration that suffered a significant loss of value from the Fed’s draconian rate hikes to date. The FDIC, which guarantees deposits up to $250,000, on Sunday evening announced that the guarantee would be extend to all depositors regardless of the size of their deposit. As has been communicated, many of the deposits were the working capital of promising, albeit not yet profitable, start-ups. Start-ups that should their break-through prove successful, hold the winning lottery ticket to hundreds of millions or billions of dollars.