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 […]

Despite “Strong” Jobs Report, Recession Still Locked In

November’s jobs report surprised to the upside. Nonfarm Payrolls (NFP) rose +199k, close to the +185k consensus view. But, it was the sister survey, the Household Survey (HS), that shocked the financial markets, as it rose +747k, more than doubly offsetting its -348k fall in October. So, it isn’t a surprise that the Unemployment Rate […]

As Inflation Fades and Incoming Data Disappoint The Fed Appears Intransigent

The headline CPI reading of no price inflation (0.0%) in October surprised the financial markets (but not us). It caused a bond market rally as yields (especially on the long end) fell. Then the PPI (Producer Price Index) showed up with a negative number for October (-0.5%), and this is generally a harbinger of what […]

Rates Spike, Sentiment Softens – Real Inflation Already at Target

Is a Recession Imminent? The relentless upward spike in interest rates continued this past week despite Fedspeak implying that the Fed will continue to be in “pause” mode, at least at the November 1st meeting. Rates on 10-Year Treasury Notes closed on Friday (October 20) at 4.91%. During the trading day, the 10-Year almost pierced […]

The Pandemic Caused Significant Economic Impacts; Not All Inflation Is Related

Over the last several blogs, we have opined that the pandemic hasn’t changed the economy’s potential growth path. The chart shows GDP growth rates beginning in the mid-1990s (with the Atlanta Fed’s +1.3% Q3/2021 forecast). The horizontal line shows a 2% growth level. Note that the left-hand side of the chart shows much higher growth than the right-hand […]

Delta-Variant, Soft Data Bode Ill for Near-Term Growth

The markets waited all week for Fed Chair Powell to speak at the Kansas City Fed’s Annual Jackson Hole Symposium.  Due to the Delta-variant, like many other business meetings, this one was held virtually.  There was growing market concern that Powell would turn somewhat more hawkish, especially since some Regional Fed Presidents appear to have […]