Halyard’s Weekly Wrap
our thoughts on the past week’s market activity, economic releases, and Federal Reserve commentary
04/10/26 – Return to Normalcy?
Markets are returning to a state of normalcy after the extreme volatility that the war with Iran prompted. The two-year note is closing the week at 3.79%, well below the 3.99% touched late last month, while the long bond is marginally lower at 4.91%. Equities have also rebounded sharply with the S&P 500 about 2.5% below the all-time high. Similarly, the U.S. dollar has resumed the weakening trend versus the Euro and the British Pound. While the return to normalcy is welcome, it comes without a definite resolution to the conflict or even a modicum of certainty. While the missiles have ceased, the Strait of Hormuz remains closed hindering global trade and the cost of oil remains close to $100/ barrel.
While economic data has largely fallen off the radar in terms of driving the direction of trading, most of what was released this week reflected economic strength. Durable goods ex-transportation registered a better-than-expected monthly gain of 0.8%, personal spending rose 0.4% over the prior month, and initial claims for unemployment insurance remained tame. This morning the BLS’s release of consumer prices showed that the overall monthly change was an elevated 0.9%, as expected, but the core price year-over-year inflation rose a more moderate 2.6%.
The unseasonable cold weather in the Northeast and the war with Iran, has been a distraction from the calendar, but earnings season kicks off on Monday with Goldman Sachs reporting. Also reporting next week are J.P.Morgan, Wells Fargo, and Citigroup, among others. We’ll be watching for clues as to how the relatively harsh winter impacted earnings.
In addition to earnings, the BLS is scheduled to release the Producer Price Index for March. The expectation is the core measure will rise 4.6% over last year, up from 3.9% last month.
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!