Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
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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…
Why the 2yr fell significantly after Powell spoke yesterday
The 2-year has fallen 12 basis points since Jerome Powell’s speech and interview yesterday. On the surface, he didn’t say anything new. But it was a shift because he reaffirmed his pausing stance for the first time since he last spoke about monetary policy at…
Special Report: Views from the Top
A collection of newspaper quotes over 75 years showing that the Treasury bond narrative now is typical to ones near past cyclical interest rate peaks. Fiscal fears are used when no other explanation suffices. PDF
Economic data has caused yields to rise
With the speed and magnitude that Treasury yields have risen recently, many commentators have suggested it is due to a new paradigm of high interest rates based on structural inflation, stagflation, a higher neutral real rate, or fiscal concerns. But recent economic data suggests that…
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…
CPI inflation today; Fed friendly
The closely watched Consumer Price Index was released this morning for August. While the headline number (all-items) came in as expected at +0.6%, the more Fed-focused core CPI (excluding food and energy) was 0.1% higher than expected; +0.3% versus +0.2% expected. Interest rates rose initially…
The Fed no longer wants to raise rates
The Fed’s blackout period started on Saturday in the run-up to the September 19th and 20th FOMC meeting and so we’ve heard from all FOMC members that wanted to speak. Based on their words and market pricing, it is nearly assured that they will not…
Powell’s Jackson Hole speech; not hawkish
Jerome Powell gave his widely anticipated speech at Jackson Hole this morning. Despite much of the financial punditry thinking he needed to contort himself in unnatural ways to demonstrate his hawkishness; he gave a straight-forward speech about the business cycle advancing and being data-dependent. He…
Powell’s Jackson Hole Speech Thoughts
Jerome Powell will give a closely-watched speech tomorrow (Friday, 8/25) at the Federal Reserve Bank of Kansas City’s annual Economic Policy Symposium in Jackson Hole, Wyoming at 10:05am ET. Historically, the Fed Chairman’s speech has often hinted at inflection points in policy, but I don’t…
“Soft landing” is the exception, not the rule
The financial media can make it seem as though “everyone” has eliminated their call for a U.S. recession. We’ve seen Bank of America (yesterday) and the Federal Reserve staff make it known they no longer forecast a recession. But Bloomberg’s recent survey of economic forecasters…