Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
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Fed meeting summary: dovish
At the conclusion of the Fed’s FOMC meeting today, the dot plot report (SEP) showed expectations for the Fed Funds rate (median) to stay at three cuts for 2024 but one fewer in 2025 (from the December 2023 projections.) While the average dot (simple) rose…
The dot plot next week will likely cause Treasury yields to rise
The Fed meets next Wednesday (3/20) which will be accompanied by the Summary of Economic Projections (SEP or “dot plot”) report done at every other FOMC meeting. Among other variables, FOMC members report where they think the Fed Funds Rate will be at the end…
Powell in front of the House today
In listening to Jerome Powell today in his semi-annual testimony to the House of Representatives, a few things stood out. 1. With services inflation accelerating in January, many wondered if Powell would strike a more hawkish tone and walk back expectations for rate cuts this…
This is just a yield backup, not a new paradigm
I wrote in early January that Treasury yields would rise because economic data had turned upwards from the universally bad data released in November. As hot economic data continued in January and February, Treasury yields have risen about half of what they fell from last…
Jerome Powell on 60 Minutes last night
Last night, Jerome Powell was interviewed by Scott Pelley on 60 Minutes (taped on Thursday.) I noticed a few things: 1. At last Wednesday’s FOMC press conference, I was surprised that Powell said the strong economy wasn’t a factor in delaying rate cuts (twice.) In…
Powell quotes from the FOMC meeting today
Overall, the FOMC press conference seemed dovish today. I noticed four things in what Jerome Powell said (source): 1. Cutting rates in March is not likely as-of now but the door is open to it. Powell said, “Based on the meeting today, I would tell…
Expect the Fed to remind markets about real economic strength this week
The idea that the Fed can cut rates soon just because inflation has fallen has kept the bond market expecting a rate cut as soon as March (50% chance as of today) and the stock market elevated. This theme has allowed the bond market to…
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!