Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
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Recent economic data has weakened
As I’ve been writing, interest rates have risen since January from stronger economic data (real and inflation data.) In recent days, the biggest challenge to that theme has appeared. The balance of economic data released in April was stronger than expected but a few data…
Fed meeting: no need to raise rates
The Fed concluded their latest meeting yesterday. In the press conference, Jerome Powell dismissed the notion that the Fed may need to raise rates again in several answers to questions. Leading up to the meeting, some commentators had thought that because the economy continues to…
An economically driven Treasury sell-off
There are many vague theories being discussed as to why Treasury yields have risen so much since January, but it isn’t that complicated. The Treasury market’s primary driver is the outlook for growth and inflation and the sell-off (rates higher) since January can be fully…
Why the 2yr yield rose so much after CPI today
From a small difference in where CPI (consumer price index) was released vs. where it was expected to be this morning, the 2-year U.S. Treasury yield rose about 20 basis points. Headline CPI came in at +0.4% and it was expected to be +0.3%. Core…
Powell’s speech yesterday
Jerome Powell gave a speech at Stanford University yesterday with a Q&A afterwards. Powell stayed dovish (in contrast to Christopher Waller late last week.) What I found more interesting was that Powell refuted many of the current discussions as to why the Fed shouldn’t or…
Fed meeting summary: dovish
At the conclusion of the Fed’s FOMC meeting today, the dot plot report (SEP) showed expectations for the Fed Funds rate (median) to stay at three cuts for 2024 but one fewer in 2025 (from the December 2023 projections.) While the average dot (simple) rose…
The dot plot next week will likely cause Treasury yields to rise
The Fed meets next Wednesday (3/20) which will be accompanied by the Summary of Economic Projections (SEP or “dot plot”) report done at every other FOMC meeting. Among other variables, FOMC members report where they think the Fed Funds Rate will be at the end…
Powell in front of the House today
In listening to Jerome Powell today in his semi-annual testimony to the House of Representatives, a few things stood out. 1. With services inflation accelerating in January, many wondered if Powell would strike a more hawkish tone and walk back expectations for rate cuts this…
This is just a yield backup, not a new paradigm
I wrote in early January that Treasury yields would rise because economic data had turned upwards from the universally bad data released in November. As hot economic data continued in January and February, Treasury yields have risen about half of what they fell from last…
Jerome Powell on 60 Minutes last night
Last night, Jerome Powell was interviewed by Scott Pelley on 60 Minutes (taped on Thursday.) I noticed a few things: 1. At last Wednesday’s FOMC press conference, I was surprised that Powell said the strong economy wasn’t a factor in delaying rate cuts (twice.) In…