Last week, investors parsed a slew of forward-looking data as they work to gauge the probability of a near-term recession. The Conference Board Leading Economic Index (LEI), a bellwether of economic health, took center stage, andrevealed a continued divergence between the economy and financial markets.… Read More
Last week, the Federal Reserve opted to keep the federal funds rate unchanged but hawkish messaging left the dooropen for further tightening in the coming months. In the Fed’s defense, economic growth has so far been resilient,suggesting the economy may be able to weather tighter conditions for longer.… Read More
On Wednesday, the Fed should provide more clarity on the trajectory of rates after vacillation in market expectationsover the past month, which we illustrate in this week’s chart. As of Friday, the federal funds futures market was pricing ina 28% probability of a hike in June and a 54% chance of a skip in June followed by a hike in July.… Read More
Last week, investors received a large bundle of data related to the jobs market. There is some indication of futureweakness, but overall the jobs data mosaic points to normalization at a gradual pace. The May employment reportshowed a net creation of 339,000 jobs, above expectations and an uptick compared to April’s 264,000.… Read More
10-year Treasury yields have climbed by roughly 38bps to 3.80% in May, their highest level since SVB collapsed,reflecting the market’s improved optimism for economic growth and shifting expectations for monetary policy.
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weekly_market_recap-05-29-2023
Despite slower economic growth, 1Q23 S&P 500 earnings have surprised to the upside, as economic momentum atthe beginning of the year supported an expansion in profit margins. With over 90% of the S&P 500’smarket cap havingreported, profit margins currently stand at 11.8%, a level of profitability that had only been eclipsed once in the pre pandemic period.… Read More
Following the Federal Reserve’s (Fed’s) decision to raise the federal funds rate to a range of 5.00%-5.25%, investorsscoured April’s CPI report and the 1Q Senior Loan Officer Survey in an attempt to get a sense of the Fed’s next steps.
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weekly_market_recap-05-15-2023
Last week, the Federal Reserve delivered what many expect to be the last rate hike of this cycle, bringing the federalfunds rate to a range of 5.00-5.25%. With the Fed now potentially on pause, at least for a while, investors are shiftingtheir focus away from the risk of further Fed tightening and towards the risk of recession, as the fallout from theregional banking crisis casts a shadow on the economic outlook.… Read More
At the March meeting, 17 out of 18 FOMC participants believed the federal funds rate needs to be 25bps higher atthe end of 2023 than its current target range of 4.75% to 5.00%. Going into this week’s meeting, the question iswhether enough has changed over the last six weeks to convince a sufficient share of voting members to changetheir mind.… Read More
Last month’s CPI report showed shelter prices growing at the slowest rate since November 2022 at 0.6% m/m.Despite still-elevated y/y growth of 8.2%, this reading was an encouraging sign the CPI measure is finally beginning tofactor in the housing market slowdown that started last year.… Read More