CPI Will Set the Tone for Financial Markets

It was a light week for economic data, giving markets time to digest and analyze the prior week’s Fed meeting and the unexpected jobs numbers. By Friday (February 10), with the Fed’s unanimous FOMC view that the future held interest rate increases (plural) and reinforced by the spectacular +517,000 jobs numbers, the markets threw in […]

Lies, Damn Lies, Payroll Data

The big spike in the Payroll data (+517K) was out of kilter with what has been occurring in the rest of the economy and other labor market data. Financial markets always shoot first and ask questions later, so on Friday, equity markets fell, and bond yields rose on the fear that the Fed would now […]

Markets to Fed: We’re Easing Whether You Like It or Not

Markets to Fed: We’re Easing Whether You Like It or Not

The financial markets now recognize that the Recession has arrived, and given those markets, it’s time for the Fed to stop tightening, if not beginning to lower rates. And because the Fed isn’t doing that, the markets are doing it for them. Not that the Fed will like it. The Fed, of course, does care; […]

Outlook: 2023 Recession Likely Deeper and Longer

Last year, our year-end outlook blog was titled: Outlook: 2022 Growth Will Likely Disappoint. And disappoint, it did. Real GDP was negative in Q1 and Q2, and while Q3 showed a slight bounce, through Q3, the economy’s annualized real growth was less than +0.2% (that’s not a typo). Thus, last year’s outlook headline couldn’t have […]

Markets See Recession – But Not The Fed

The CPI for November (+0.1% M/M) was milder than markets expected, which brought the Y/Y CPI inflation rate to 7.1% in November from 7.7% in October. The core CPI (ex-food and energy) rose +0.2% M/M, the smallest increase since August 2021. Excluding shelter, the Core fell -0.1% for the second month in a row, an […]

The Data Say Recession and Inflation are Cratering

But This Fed Continues to Raise Rates Since October, long-term interest rates have fallen. On October 18, the 10-Yr Treasury Bond was yielding 4.226%. It fell to 3.408% on Tuesday (December 6) and closed at 3.587% on Friday (December 9). Short-term rates are closely tied to the Federal Funds rate, the administered rate set by […]