Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
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It’s the data, stupid!
Just like October of 2023 or April of 2024, there is a lot of confusion over why rates have risen so much. And just like those times, the answer lies in the economic data and their extrapolation. All the other explanations (bond market vigilantes, foreign…
The Beige Book is better and the 2-year yield isn’t done rising
The Beige Book, a compilation of anecdotal reports on the economy that the Fed will consider for its upcoming November 7th meeting, was released today. In it, fewer districts were characterized as contracting and, combined with my work on the GDP of each Fed district,…
Hotter inflation is more important than weaker initial jobless claims today
Two important economic data releases came out today that were divergent. Inflation in the CPI report (Consumer Price Index) was hotter than expected suggesting higher interest rates but initial jobless claims jumped up 33k suggesting lower interest rates. The bond market has mostly paid attention…
On the jobs report and recession
Also on ZeroHedge The strong jobs report today (+254k) caused the dam to break on what I’ve been writing about for weeks with Treasury yields. The 2-year yield is higher by 22 basis points today. With the 2-year now at 3.93%, the bond market is…
5 points from Jerome Powell’s interview yesterday
My added emphasis throughout. Yesterday, Jerome Powell sat down for a live Q&A with the President of the NABE (National Association for Business Economics), Ellen Zentner, at their annual conference. Powell had a strong bullish tone and spent much of his time trying to warn…
For interest rates, it’s not if, but when
The question for interest rates now isn’t if there will be a recession, it is when it will come. The “recession trifecta” as I call it, has occurred; the unemployment rate rising (Sahm rule), Leading Economic Index (LEI) falling materially, and the yield curve inverting….
A 50 basis point cut may be the final ingredient for yields to rise
As I wrote last Friday, I think the Fed will cut 50 basis points tomorrow to get ahead of economic weakness. While there is no crisis evident yet, it is the right thing to do given how consistent business cycles unfold. In other words, a…
I now think the Fed will cut 50bps next Wednesday
In an unusual situation, the bond market is going into next week’s FOMC meeting unsure of how much the Fed will cut rates. The Fed likes to, and the market expects for the Fed to telegraph what they are going to do beforehand to lessen…
White Paper: GDP of each Federal Reserve District
I wanted to find out how much GDP comes from each of the 12 Federal reserve districts. Not finding it, I calculated it, and since it isn’t available anywhere else and isn’t easy to do, I wrote a short Whitepaper about it so others can…
On the jobs report today and the 2-year yield
The Non-farm Payroll number released today came in less than expected by 23 thousand and the prior two months were revised down another 86 thousand. The rounded unemployment rate fell 0.1% but, using another decimal, it fell just 0.03%; from 4.25% to 4.22%. The payroll…