Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
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All about Waller
Federal Reserve Governor Christopher Waller started the idea in late November that the Fed would be cutting rates soon but he took that away yesterday, likely causing a near-term inflection point towards higher short-term Treasury yields. It was a major moment for the bond and…
The bond market has gotten ahead of the economic data
Happy New Year! Economic data released in November (representing October) was uniformly negative and a major factor in how dovish the Fed was at their most recent 12/13 meeting. In the press conference, Jerome Powell said, “Recent indicators suggest that growth of economic activity has…
Heed the Ghost of Recessions Past
A short Christmas-themed piece with a reminder that despite pervasive “soft-landing” talk, the most reliable indicators of recession say otherwise. Happy holidays!
Would inflation be low enough for the Fed to cut in March?
The real Fed funds rate (Fed Funds minus inflation) is a simple metric of how tight the Fed is. Using the Fed’s preferred inflation (core PCE deflator, YoY), this is currently 1.9% (5.4% Fed – 3.5% inflation = 1.9%.) In other words, the Fed Funds…
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…
Recent yield behavior is consistent with historical cyclical yield peaks
I think cyclical yield peaks were made for the Treasury market in October (on 10/18 for the 2-year and 10/19 for the 5 to 30-year.) This is based on the Fed pausing after a rate hike cycle, the yield curve de-inverting, leading economic indicators continuing…
Things are changing
Things are changing: the Beige Book, waning Fed jawbone, and the first Fed cut The Atlanta Federal Reserve prepares what they call the “Beige Book” to summarize anecdotal economic activity in the 12 geographic Federal Reserve districts two weeks before each Fed meeting. The most…
Special Report: It Won’t Be A Repeat of the 1970’s
Economic conditions now are quite different from the 1970’s and still disinflationary. PDFOn Advisor Perspectives
Leading indicators suggest a hard landing
The Federal Reserve and many financial pundits are hoping for a soft-landing; a condition where real growth falls below trend rather than goes negative (a recession) after an economic boom cycle. Take these predictions with a grain of salt because they are a trope before…
The Fed used a hawkish tone this week to keep bond yields higher
The two-year rose 23 basis points this week after several Fed speakers put an emphasis on not being sure if they are done hiking rates. I suspect they used this language, not because of a changing opinion about pausing (the economic data has been weak…