Halyard’s Weekly Wrap
our thoughts on the past week’s market activity, economic releases, and Federal Reserve commentary
04/03/26 – Relief rally in bonds as growth fears out way energy price shock.
For the markets, this week was welcome relief after last week’s debacle. Fundamentally and economically, nothing has changed so we’d describe this week as a relief rally.
This morning’s release of the February employment report was mostly good news. According to the BLS, the economy added 178,000 jobs in the month and the unemployment rate ticked down to 4.3%. However, last month’s disappointing contraction in the jobs count was revised from -92,000 to -133,000. Most economists were looking for an upward revision.
Earlier this week Retail Sales for February showed a break for the weakness seen over the prior two months with a 0.6% month-over-month gain. Furthermore, the gains were broad based, which bodes well for the economy, or at least it did. The war with Iran is dragging on longer than the President had forecasted and there’s no doubt that it’s dragging down economic activity. The Atlanta Fed GDPNOW, the real time Fed forecasting tool, has dropped sharply to 1.63% from more than 4% earlier this year. Ominously, gas prices continue to rise which is likely to crimp overall consumption demand.
For the week, the yield-to-maturity of the 2-year note has fallen by nearly 20 basis points, while the long bond is about 8 basis points lower.
Attention next week will be on the CPI reading for March, and the early forecast is that it’s not going to be good news. On a year-over-year basis, CPI is expected to rise to 3.4%, up from 2.4% last month. While that’s unlikely to persuade the Fed to raise the overnight rate, it will certainly erase talk of any future rate cuts.
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.