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 – 10/15/21
/in Weekly Wrap/by halyardThere was much to analyze this week with inflation coming in higher than expected and retail sales surprising to the upside. Equities once again pulled themselves off the mat and appear poised to go at least a few more rounds with greedy and fearful investors. Less obvious but quite telling is the yield curve flattening that took place. The spread between the 2-year note and the 30-year bond has flattened 18 basis points since last Friday. That’s a meaningful move and hints that investors are starting to position for a sooner than advertised interest rate hike.
Halyard’s Weekly Wrap – 10/08/21
/in Weekly Wrap/by halyardAt first glance the September unemployment report released on Friday looked wildly disappointing. It’s been described as “Disastrous” at several media outlets. Consensus was looking for 500,000 newly created jobs for the month, and to be honest, we would have taken the over on that bet. Instead the BLS reported that the economy generated 194,000 jobs for the period.
Halyard’s Weekly Wrap – 10/01/21
/in Weekly Wrap/by halyardFundamentals took a back seat to political in-fighting this week as the Republicans made it clear that they were going to do precious little to assist the Democrat’s goal of lifting the debt ceiling, keeping the government open for business, or passing Biden’s $3.5 trillion social stimulus. Interest rates moved higher across the curve as the uncertainty of fiscal policy spooked bond investors. The new 2-year note auction that was held on Monday was described by one pundit as “gruesome”, given the below average bid-to-cover ratio, and the yield at which it cleared, which was nearly a basis point above the yield asked at auction time. Following the auction, the yield-to-maturity of the 2-year note rose to 0.31%, before drifting back down to 0.266% to close out the week. That’s nearly double where the note traded last summer! Stocks fared worse, with the S&P 500 trading down about 2.5% for the week.
Halyard’s Weekly Wrap – 09/24/21
/in Weekly Wrap/by halyardWhile Chairman Powell and the Open Market Committee failed to signal a start to tapering open market purchases, they did inch closer. Powel described current economic condition as having mostly met the committees standard to begin to taper and suggested that an announcement would be made at the November meeting. Bond investors didn’t like the news and drove the yield on the 10-year note 15 basis points higher to end the week at 1.45%.
Halyard’s Weekly Wrap – 09/17/21
/in Weekly Wrap/by halyardEconomic data this week offered something for everyone. For those seeing the uptick in inflation as transitory, the Consumer Price Index data was not as bad as feared. The month-over-month CPI fell from 0.5% in July to 0.3% in August; arguably an improving trend, but still rising at an above target pace. The year-over-year rate also improved marginally falling from 5.4% in July to 5.3% in August. Again, right direction but still alarmingly high.
Halyard’s Weekly Wrap – 09/10/21
/in Weekly Wrap/by halyardWith the confluence of Labor Day on Monday and Rosh Hashana on Tuesday and Wednesday, we kicked off the week expecting a quiet one. Instead, corporations issued paper at a “break-neck” pace. For the week we saw 52 borrowers sell in excess of $76 billion in paper. Surprisingly, the large supply barely moved interest rates, as the 10-year Treasury note was less than 4 basis points higher for the week. The S&P 500 traded lower each successive day this week as forecasts for slowing economic growth dominated the headlines, but point-to-point the index was down approximately 1.00%. Hardly a correction!