Go to Top

Latest UVA News Posts

Incoming Data Look Robust – It’s A Mirage

Incoming PPI data marked the initial volley of the oncoming “siege” of inflation data. Despite reopenings, state Initial Unemployment Claims spiked as March ended.  Either the reopening lags are longer than we thought, or disincentives from overly generous benefit payments are at play. If recent history is any guide, only part (25%) of the stimulus cash will be spent on consumption, the remainder saved or used to reduce debt.  Business, …Read More

The Reopening High – Long-Term Issues Quite Concerning

The big news of the week was always going to be the monthly BLS Employment Surveys.  It was destined to move markets one way or the other, and since the +916K number from the Payroll Report (+1,072K if the +156K revision to February is included) significantly bested the 660K-675K consensus that was in the market, the equity markets are likely to move higher in the short-term, as is the longer …Read More

Unwarranted Inflation Fears Could Impact Recovery

Interest rates steadied this past week (March 22-26) after the Fed altered the rules, vowing not to cave to market whims or pressures, instead waiting for the “actual data” to dictate the path of monetary policy.  We agree with the Fed’s approach, but worry that the markets’ uneducated view of the causes of systemic “inflation” may push market rates to the point of endangering any chance of a robust recovery. …Read More

Fed Ignoring Market Rate Spikes – Basing Policy on “Actual Data”

The median of the Fed dot-plot (a summary of the individual member views on where Fed Funds will be over the next three years) indicated no changes in the Federal Funds Rate until 2024.  But, because the Fed upgraded its economic (GDP) forecast to 6.5% from 4.2% for 2021, and a few more FOMC (Federal Open Market Committee) members moved their “next rate hike” forecast into 2023, the market is …Read More

Dysfunctional Credit Markets – Still Waiting on the Fed

As the week ended, U.S. credit markets appeared confused, if not outright dysfunctional.  The 10-Year Treasury yield began February at 1.09% and reached an interim peak of 1.54% on February 25.  Then it retreated to 1.42% as markets thought the rise had simply been overdone.  But Fed Chair Powell’s refusal to assure financial markets regarding the Fed’s intentions at the Wall Street Journal’s Jobs Summit (as detailed in last week’s …Read More

Careful Mr. Powell; Higher Rates Will Kill the Recovery

Treasury yields rose again this week; blame this one on Fed Chairman Powell.  In an interview at the Wall Street Journal’s Job Summit, he said that the Fed isn’t ready to stop the run-up in yields “until financial conditions tighten.”  In so saying, he paved the way for those financial conditions to tighten as markets immediately obliged.  We can’t help but think that it would have been better if he …Read More