Lot of Moving Parts in the Bond Market

Treasury Issuance Back at Pandemic Levels   As we’ve noted over the last year, the current level of US fiscal deficits, given a strong economy and low unemployment, is uncharted territory.  It was ironic that Phillip Swagel, director of the Congressional Budget...

March 2024 FOMC: Dovish Tone

The FOMC voted unanimously to leave their benchmark rate unchanged in the target range of 5.25%-5.5%.   Source: Bloomberg as of 03.20.2024   The big surprise was the willingness of the Fed to maintain their projection for 3 rate cuts in 2024 even on the back...

March CPI: Inflation Still Sticky

Inflation Stabilizing Above 3%   The U.S. CPI rose +0.4% m/m (3.2% y/y) & core (ex-food & energy) was +0.4% m/m (3.8% y/y) in February. The so-called “supercore” gauge slowed to 0.47% on the month, down from a red-hot 0.85% in January. The data is...

Competing Forces in the Bond Market

Productivity is the Way Out Productivity plays a crucial role in influencing both inflation and economic growth. A key to stopping a second wave of inflation is likely productivity (output per hour) picking up. Instead of having too much money chasing too few goods we...

CPI: Shelter Costs Remain Uncomfortably High

Consumer prices came in hotter than expected to start the year. This delivers another painful blow to market expectations for quick and aggressive Fed rate cuts. January CPI MoM Headline: +0.3% (Exp: +0.2%) Core: +0.4% (Exp: +0.3%) YoY Headline: +3.1% (Exp: +2.9%)...

Fed Reconfirms 2% Inflation Target

The Fed left the benchmark rate unchanged at 5.25%-5.5%, as was expected. This is the fourth meeting in a row of no action. They did back away from their prior bias to further tightening as inflation has fallen notably over the past year. However, it is still above...