Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell futures/securities. The material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.
Today’s yield movement: politics
Interest rates rose today despite economic data coming in on the soft side. Because the movement is concentrated at the long-end of the yield curve (30-year higher by 7.5bps, 2-year higher by 1bps), this is the bond market digesting the reality that Biden is a…
Stages in a bubble
The graphic below, Stages in a Bubble, was created by Professor Jean-Paul Rodrigue in 2008. Note the “New Paradigm” at the top. When I reference the idea of a “new paradigm” in my notes (like here and here), it is because it has long-been noticed…
The Fed meeting today wasn’t as hawkish as it seems
The headline from the Fed meeting today is that the median of their Survey of Economic Projections (SEP) shifted from expecting three cuts by the end of this year on March 20 (two meetings ago) to just one cut today; up 50 basis points. The…
Unemployment Rate rise says no soft-landing
The Unemployment Rate rose to a new recent high of 4.0% on Friday (red dot in chart below.) Notice that when this rate makes a low and then begins to rise up (curl), a recession (gray vertical bars) is nearby. The Unemployment Rate has now…
On the yield movement caused by the Jobs report today
The 2-year yield is higher by a large 16 basis points today after the non-farm payroll (NFP) report came in above expectations (272k jobs added versus 180k expected.) It was a big “beat”, but more importantly for the bond market, it didn’t corroborate the recent…
Not a new paradigm & new index
Because interest rates have risen in recent months, financial commentators are getting carried away with a “new paradigm” narrative suggesting that interest rates will be higher indefinitely. They cite trade policy, “green” investment, AI, war, deficit spending, and “friend-shoring” to suggest the U.S. (if not…
Advisor Perspectives award
I didn’t see this until yesterday, but I was named one of the Top 25 Venerated Voices™ by Advisor Perspectives in the third quarter of last year for my writing. I was ranked 17 of 25 and share the award with recognizable industry names like Howard Marks,…
Economic data weakens further
Economic data is especially important now because the Fed is “data dependent” in determining when and how much to lower interest rates. As I wrote earlier this month (5/3), there was a meaningful downward shift in economic data at the beginning of this month with…
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…