The Fed pivots

The 2-year U.S. Treasury has fallen a large 30 basis points from the Fed meeting yesterday because the Fed was dovish when they were widely expected to be hawkish but more importantly, because of the “once a business cycle” significance of shifting towards being dovish…

On the Fed meeting yesterday

Interest rates fell along the yield curve during Jerome Powell’s press conference yesterday because he remained resolute about pausing despite strong economic data since the last meeting. Markets had feared his tone would change after strong Q3 economic data. It did not. The Fed’s stance…

On Q3 GDP

Treasury yields fell after the strong Q3 GDP report this morning (+4.9%) because a big number had been incessantly talked about, predicted, and priced-in over the last three months. For the Treasury market, it was sell the rumor, buy the news. Now, the market will…

Inflation is falling fast

Despite the pervasive narrative that inflation is stubborn and sticky, it is falling quickly compared to other disinflationary periods. Both the core (excluding food and energy) and headline consumer price index have fallen at their second fastest rate compared to other historical disinflationary periods going…

FOMC meeting summary

The FOMC forecasts were hawkish describing a soft-landing, but the press conference was dovish. Forecasts (Summary Economic Projections or SEP) Short-term rates sold off dramatically yesterday afternoon; the 2-year rose 12 basis points. This was largely because the Fed’s average expectation for the Fed Funds…