In 1993, the 10Yr Treasury yield surged from a 20-year low of 5.2% to above 8% within a year in what was later coined the Great Bond Massacre. Why? Because the Federal Government was running deficits. Congress and President Clinton got the message and in response balanced the budget and ran a surplus by the […]
Stock Market Blog
Connecting The Dots
The Fed held their policy meeting on Wednesday and kept rates unchanged which was expected. However, their forward guidance changed significantly when reviewing their dot-plot which is a survey of each voting member’s projection of interest rates. What changed in the dot-plot was a cut in the Fed Funds Rate in 2024 from -100bps to […]
Watch The Yield Curve
The seasonally weakest part of the calendar for the stock market is the next two weeks and lucky for us we have a Fed meeting on Wednesday to get a report card on their next policy step (or mistake). The Fed will not have an easy time at this meeting as the inflation data this […]
Playing Defense
Welcome to the first weekend of NFL football which means the summer is over and a seasonally weak time of year for the stock market. Lots happened over the past few months as oil prices rose, interest rates increased and the hope of a soft landing faded. And don’t forget about the euphoria around artificial […]
Treading Water
Another week of summer trading in the books but it was far from boring. There were earnings reports from retail stocks Macy’s, Dick’s Sporting Goods and Foot Locker (among others) that warned of poor earnings and a weaker outlook as persistent inflation may finally be causing the consumer to reduce spending. Not to mention that […]
Bonds In the Spotlight
The most significant piece of news this week is that the Fed hinted more rate hikes may be needed in their minutes from their July meeting. This is nothing new but the reaction in the bond markets was certainly noteworthy. If you look at the adjacent chart of the US yield curve you can see […]
The Negative Feedback Loop
The Fed is getting their way as rate increases are cooling job growth. On Friday, the payroll number for July came in lower than expected at +187K and you can see on the adjacent chart the emerging trend. Despite the declining job growth, wages continue to rise at an annualized rate of +4.4%. Not something […]
September in the Crosshairs
A significant week as the Fed, Bank of Japan (BOJ) and the European Central Bank (ECB) all raised rates to combat inflation. We also got better than expected GDP and earnings reports are flooding in with mostly decent news so the soft landing scenario remains a possibility (but has never happened). The markets will now […]
Cruise Control?
The financial markets have a lot of moving parts right now with manufacturing in contraction and services industries in expansion. The good news is that labor markets have held together despite the sharp rate increases over the last year. Not to mention inflation numbers are coming down (more below) into an area where the Fed […]
The Dog Days of Summer Ahead
A shortened trading week after the 4th of July holiday but we did see that the economy continues to grow and the jobs market is steady and not too hot with the jobs data released on Friday. However, monetary policy changes work on lags and the rate hikes over the last year are beginning to […]