Halyard’s Weekly Wrap
our thoughts on the past week’s market activity, economic releases, and Federal Reserve commentary
10/24/25 – Summer Doldrums Continue in October
The Bureau of Labor statistics remains closed along with the rest of the government amid the funding shutdown, but certain staffers were recalled to release the consumer price index for September. The index is used to calculate the cost-of-living adjustment for social security had been calculated before the October shutdown.
In addition to CPI, S&P released the various PMI indices and University of Michigan surveys were published this morning. The PMI’s came in slightly better than expected while the U Mich surveys were not so upbeat. The 1-year inflation expectation was unchanged from the last measure, remaining at a troublesome 4.6%. Even more worrying is the 5-10 year inflation expectation that ticked up to 3.9% from 3.7% at the last survey. The consumer sentiment reading in the U Mich survey holds near decade lows. The yield curve was nearly unchanged for the week.
Next week will be a busy one for markets as 176 companies of the S&P 500 index report earnings and the Fed concludes its two-day meeting on Wednesday. Earnings this season have been better than expected, pushing the SPX index through 6,800 to a new all-time high as retail investors ignore the lofty valuations in expectation of accelerating growth.
The consensus view is that the FOMC will announce a cut to the Fed Funds rate by 25 basis points on Wednesday. The whisper on the street is that they’ll also terminate their quantitative tightening operation. In doing so, the net effect should be somewhat bullish for Treasury Bonds at the margin. We expect that the Chairman will be peppered with question about the dearth of economic data and how they intend to guide monetary policy during the shutdown. Given that he tends to avoid politics at all costs, we expect him to be evasive on the subject.
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 – 6/21/24
/in Weekly Wrap/by halyardA mid-week U.S. holiday, summer vacations, and noisy economic data all led to mostly unchanged bond and stock markets this week. For the week, the 2-year/30-year yield curve was 2.5 basis points less inverted, closing the week at -33.5 basis points, with the entire move coming from a marginal drop in the yield-to-maturity of the 30-year bond. The S&P 500 briefly traded into record territory but is closing the week about 1% off of the 5,505.53 record touched on Thursday.
Halyard’s Weekly Wrap – 6/14/24
/in Weekly Wrap/by halyardThe consumer price index (CPI) for May was released Wednesday, the morning of the FOMC meeting. The one-month change to the index was 0.0% and the headline year-over-year index rose 3.3%, a 0.1% improvement over last month’s reading. Investors interpreted the change as a big step in the right direction and rallied stocks and bonds, pushing the yield curve down to recent lows and the S&P 500 to a fresh all-time high.
Halyard’s Weekly Wrap – 6/7/24
/in Weekly Wrap/by halyardThe investment community, lately, had bought into the narrative that the economy is slowing, and that the Fed was about to reengage in the rate cut conversation. The May employment report, released this morning, fully took the air out of that notion. After April’s report came in below expectation, economists were expecting the number of new jobs created for the month would total 180,000, with the low estimate at 120,000 and the high at 259,000. The actual number blew past those forecasts with 272,000 new jobs created in the month. The report was a little messy in that the household report showed a contraction of -408,000 jobs and the labor force shrunk by -250,000 workers causing the unemployment rate to tick up to 4.0%. We advise to look past that uptick due to a few nuances between the household and the establishment survey. The bottom line is the June jobs report changes the soft-landing narrative and further postpones the likelihood of a rate cut anytime soon.
Halyard’s Weekly Wrap – 5/24/24
/in Weekly Wrap/by halyardThe release of the May 1st FOMC minutes was as expected, with the members concurring that the rate of inflation is stubbornly stuck at levels above which they are comfortable. The second sentence of the minutes read “Domestic data releases over the intermeeting period pointed to inflation being more persistent than previously expected and to a generally resilient economy,” That’s pretty much says it all. The economy continues to hum along despite the FOMC’s tightening of monetary policy. A Few economists continue to rumble that the Fed will need to again hike the overnight rate but that’s far from consensus.
Halyard’s Weekly Wrap – 5/17/24
/in Weekly Wrap/by halyardThe April consumer price index and the various subcomponents came in as expected offering relief to investors fearful of an upside surprise. The year-over-year headline measure showed that inflation cooled to 3.4% from the 3.5% reported in March. The change in direction was welcome news to the capital markets but the incremental improvement is hardly enough for the Fed to claim victory. There’s an old saying in the capital market “that one number does not make a trend” and that clearly applies to last month’s CPI. We’ll be watching the index through the summer to identify any potential trend.
Halyard’s Weekly Wrap – 5/10/24
/in Weekly Wrap/by halyardAfter last week’s repricing of the yield curve to again reflect the possibility of one rate cut this year, the interest market barely moved this week. The dearth of economic data allowed the 2-year/30-year yield curve to remain at a 20-basis point inversion with the 2-year notes closing the week modestly higher at 4.86%. That was good news for the equity market as the S&P 500 continued to rally and now stands less than 1% away from its all-time high as earnings releases dwindle to a trickle.