Halyard’s Weekly Wrap
our thoughts on the past week’s market activity, economic releases, and Federal Reserve commentary
our thoughts on the past week’s market activity, economic releases, and Federal Reserve commentary
01/31/25 – Bond yields fell for the week – leading to a steeper yield curve
We weren’t expecting much from this week’s FOMC meeting and that’s exactly what we got. The committee left the overnight rate unchanged, as expected, and didn’t offer a definitive path for future rate moves. So much so that market watchers were left guessing whether the next rate move would be higher or lower. The committee statement read that the overnight rate is “significantly less restrictive,” and that “we do not need to be in a hurry to adjust our policy.” For what’s it’s worth, the White House didn’t offer an opinion on the action. As we wrote last week, we feared an early combative stance from the new President, so no comment was welcome by market participants.
Looking to the Fed Funds market for a clue as to market thinking, futures are implying a 25 basis point cut by this summer and a 50% chance of another 25 basis-point cut by the end of this year. Coincidently, there is no expectation for a rate hike this year.
Economic data this week continues to be not-to-hot/not-too-cold! Housing data offered a modicum of hope that the bottom of the housing bust has been reached with the bounce in new home sales, while pending home sales presented a more dour picture. With mortgage rates remaining above 7.0%, we believe a meaningful uptick in home sales is unlikely anytime soon.
On Thursday the BEA released the first look at GDP for the final quarter of 2024 and, again, the results were mixed. The total annualized change was 2.3% quarter over quarter, coming in below the 2.6% expectation and well below what we though was going to be an upside surprise. However, the total was dragged lower by a fall in gross private investment and a deterioration in net trade. The bright spot of the report was the personal consumption component which rose 4.2%, driven by the consumer’s continued “shop till you drop” mentality.
As we conclude the last full week of January, news is crossing the tape that the Trump White House will begin imposing tariffs on China, Mexico, and Canada, effective February 1st. The news has taken some of the froth out of the market, as the S&P 500 had been trading just below an all-time high before reversing as we headed into the close, as traders speculate what the near-term implications of the tariffs will be on the market.
We expect that tariff confusion will hamstring trading activity as we enter the first week of February. Next Friday the BLS will release the employment statistics for January, and after posting a better-than-expected total last month, the market expects non-farm payroll growth to slow to 165,000 new jobs in January, with the unemployment rate holding steady at 4.1%.
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 – 09/03/21
/in Weekly Wrap/by halyardThe Bureau of Labor Statistics reported that the U.S. economy only added 235,000 new jobs is August. That was well below the anticipated 733,000 that was the consensus expectation. The immediate question is that number weak enough to convince the FOMC to postpone the tapering of open market purchases. Given the verbal jousting of the various Fed Presidents and Governors over the last few weeks, we conclude that the answer is a solid Maybe.
Halyard’s Weekly Wrap – 08/27/21
/in Weekly Wrap/by halyardPowell turned ever so mildly dovish in his comments to the virtual Jackson Hole Central Bank meeting on Friday. Despite a cadre of Central Bankers calling for an immediate halt to the open market purchases, the Chairman said the Open Market Committee is likely to commence tapering before the end of 2021. We believe the street had set up for more hawkish language, with some looking for an announcement that taper would begin in September. That was a foolish call! While the Fed doesn’t always look to the calendar in making policy announcements, the Chairman had to realize that doing so on the last Friday of August would rock the market. Instead Treasuries traded sideways which was enough to drive the S&P 500 to another record high.