Last month, significant attention was directed towards whether the Federal Reserve (Fed) would pause the ongoing tightening cycle, following the 10th consecutive interest rate hike on May 3rd. There are compelling arguments supporting a pause in the tightening cycle. Firstly, it takes approximately 8 months or more for the full effects of interest rate hikes to be reflected in monetary conditions. Given that the Fed has implemented a total of…
As expected, the Fed hiked the fed funds rate by 25bps on Wednesday to a target range of 5.00% to 5.25%. But the focus was on the Fed’s statement, with market participants anticipating the Fed to pause on hiking rates any further. The FOMC removed a line from their previous statement that said the committee “anticipates that some additional policy firming may be appropriate” and now states they will consider…
Strap In It was another exciting ride this month in the bond market. The 10T dropped about 50bps to 3.5% and the 2T lost roughly 80bps to 4.1%, with multiple daily swings of 30bps+. While recent economic data has supported the Fed’s case to continue raising rates, turmoil in the banking sector and fears the crisis may spill over into the larger market have raised questions on the Fed’s ability…
Recap of Wednesday’s FOMC Meeting As expected, the FOMC hiked fed funds again, this time by 25 bps, bringing the benchmark level to 450-475 bps. This is the highest fed funds has been since 2007. The FOMC’s statement noted inflation “has easedsomewhat, but remains elevated”, not declaring victory against inflation yet. At the press conference Powell acknowledged the disinflationary process has began, but stressed the FOMC is “talking about a…
An optimistic start to 2023? While 2023 is still full of uncertainty, it is likely to be a less tumultuous year than 2022 as the Fed approaches the end of its tightening cycle and inflation continues to move in the right direction. Investors are much more confident in the outlook for 2023 than they were only a few months ago, though a possible recession on the horizon is keeping everyone…
January 6, 2023 Summary The December jobs report included some promising news for today’s economy. 223,000 jobs were added during the month, higher than the 206,000 estimated. However, this is less than the 256,000 jobs that were added in the previous month. Job gains were highly concentrated in the leisure and hospitality, healthcare, construction, and social assistance sectors. Although there has been a notably high number of layoffs from tech…