2 min read2023 Recap Despite the majority of market participants forecasting a recession in 2023, GDP rose over 2% in both the first and second quarters and jumped 4.9% in the third quarter, while both equity and fixed income markets had positive returns in 2023. The resilient consumer, cooling inflation, and the Fed’s pivot to deeper 2024…
2 min readNovember – The Everything Rally It was truly a November to remember as equities, Treasuries, investment grade & high yield corporate bonds, and commodities all posted solid gains. The primary drivers were a dovish pivot from Fed members and expectations of a soft landing for the U.S. economy, which translated into the markets eliminating odds of…
3 min readData Supports a Fed on Hold At a recent speech, Fed Chair Powell pushed back on the narrative that the Fed is done raising rates. He continues to reiterate the Fed will be reviewing monetary policy decisions “meeting by meeting” and that more data is needed to show inflation is coming down sustainably. Since the meeting,…
3 min readGDP Doubled in Q3 2023 The first reading for 3rd quarter GDP came in at +4.9%, more than double the +2.1% reading in the 2nd quarter and the most in nearly two years. The US consumer continues to drive the economy forward with personal consumption rising +4%. Spending on services rose by the most in…
2 min readFed Pivot Recent speeches from Fed members have signaled that the FOMC may be finished raising rates, due in part to the rise in long-term bond yields over the past month. The rise in Treasury yields has increased borrowing costs by an amount equal to or even more than a 25-bp rate hike. Dallas Fed…
4 min readTreasury Yields Surge (as of 10/3/2023) September saw Treasury yields rise to the highest levels in decades. Several factors may have led to the increase, including: Higher oil prices – both Brent and WTI are reaching new highs for the year and are close to $100 per barrel. Higher-for-longer narrative – the Fed’s updated projections…
9 min readCould potential changes in the economy from the end of the Fed’s tightening cycle lead to a higher neutral rate? Introduction With the Federal Reserve System (the “Fed”) nearing the end of its tightening cycle, the question for investors has shifted to whether rates can truly remain “higher for longer”, to quote the current in-phrase…
4 min readCPI – headline spike all energy related Headline inflation had been forecasted to increase in August as a result of the highest fuel prices so far this year. So, it came as no surprise that CPI rose +0.6% in August, which marked the highest monthly increase since June of 2022. However, markets were surprised that…
2 min readAugust Bond Yields – Up, then Down To recap, US Treasury yields rose during the first half of the month led by a variety of factors: increased Treasury supply, solid economic data, higher inflation expectations, reduced overseas demand for US government securities and Fitch’s ratings downgrade. The 10-year note reached a 16-year high of 4.36%…
4 min readTwo Down, Two To Go Following July’s FOMC meeting, Fed Chair Powell repeatedly referenced the theme of data dependency and confirmed that the Fed will be focused on the two job reports and two CPI reports still to be released ahead of their September meeting. To date, we’ve seen two of the four reports. First…