Headline Data Look “Strong,” But Contradictions Abound

The January Non-Farm Payroll (NFP) number was always destined to be a market mover, especially after Fed Chair Powell said that, while the Fed will be lowering rates in 2024, March was not their base case. The +353K NFP number (consensus was +185K) with December’s number revised up to 333K from 216K, and the +0.6% […]

Markets Pay Little Attention to Emerging Data That is, Until They Do

The S&P 500 hit an all-time high on Thursday (January 25) on the heels of an unexpectedly robust +3.3% annualized growth rate of real GDP for Q4. Market expectations had been for a +2.0% print, and even the normally optimistic Atlanta Fed GDP Now model was only calling for +2.3% The chart shows the sources […]

As Inflation Recedes, Will the Fed Act in Time?

The CPI for December was slightly hotter than expected, up +0.3% from November (which in turn only rose +0.1%). The market expectation was for a +0.2% number. As a result, the headline CPI, which looks back 12 months, kicked up to 3.3% in December from November’s 3.1% read. The Core CPI (ex-food and energy), however, […]

In 2024, Expect Lower Interest Rates & Lower Inflation

As we entered 2023, households were still flush with the cash from government handouts, the economy was healthy, the federal government was still running a significant deficit, and interest rates, while rising, had not yet been restrictive long enough to slow the economy. Real (inflation adjusted) GDP grew at an annualized rate of 3.0% for […]

Finally! The Fed Recognizes Inflation’s Retreat Financial Markets Celebrate

Despite the fact that markets were 90%+ certain that the Fed was done hiking, both the equity and fixed-income markets were surprised that the hawkishness, that had been so prevalent for the past 18 months, had completely disappeared. We were surprised, too! The dovish policy statement and Chair Powell’s demeanor complemented each other. We think […]