Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
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After two cuts, the Fed is back to paused
Yesterday’s FOMC meeting was a meaningful pivot that I suspect will result in significantly higher Treasury yields (particularly at the front-end/belly of the curve) over time to price-out the cutting that has been priced in, not unlike the end of last year. For a fifth…
Great calls
I’ve gotten an exceptionally high number of predictions right over the last two years since I started posting publicly. I put more emphasis on measuring macro-economics faster (LDEI, more on that at the end) and less on hot topics and micro-economics than most. I always…
Post FOMC meeting comments
Yesterday’s FOMC meeting was a combination of dovish and hawkish elements, but overall, the meeting was more dovish than I expected because Jerome Powell sounded dovish in the press conference. Nevertheless, Treasury yields rose as I expected (about 6bps) and I continue to think they…
Special Report: Doves Are Ignoring a Lot
The bond market is priced for six FOMC cuts to begin tomorrow, predicated on low payrolls and Jerome Powell’s Jackson Hole speech, both of which are misunderstood. It’s too many. Five points to show it with negative implications for bond and stock markets. [PDF]
The Fed isn’t as dovish as markets think
Three things have come together (somehow it is always three that make people feel certain) to give the impression that a September rate cut is a done deal; priced at an 88% chance in the Fed funds futures market. They are the weak July jobs…
Powell’s speech found the middle
Jerome Powell gave a much-awaited speech at the Kansas City Fed symposium at Jackson Hole this morning. Because of rising/hotter economic data, and a hawkish tone to the Fed lately, I thought he would lean hawkishly. He didn’t, but he wasn’t dovish either. Overall, the…
Treasury yields will likely rise until weak data become prominent again
After the July payrolls report was released on August 1st, dovishness was in the air as regional Fed bank presidents Mary Daly and Neel Kashkari leapt to support the idea of near-term cuts because the labor market had weakened to a recessionary level (see chart…
Kashkari makes four
I wrote in last Friday’s LDEI update regarding the large downward revisions for non-farm payrolls, From this data, I expect more FOMC members to defect to Waller and Bowman’s dovish camp. And within a few days it happened. San Francisco Fed President Mary Daly made…
The Fed gave half an inch
After the last FOMC meeting, I wrote, “Powell didn’t give an inch”, referring to his avoidance of acknowledging economic weakness. In this meeting, there were some acknowledgements of economic weakness (half an inch, let’s say), but Powell did his best to be dismissive of them…
Five reasons to expect some softening from the Fed tomorrow
Last month, with economic data weakening quickly and Federal Reserve Governor Christopher Waller lobbying for a cut, I expected the Fed to cut rates at the FOMC meeting this week. But upon the strong payroll report on July 3rd, I wrote in my semi-weekly LDEI…