“Higher for Longer” Rates Have Risks – Especially for Banks

As expected, at its recently concluded March meeting, the Fed stood pat on interest rates. Of greater interest, the “dot-plot,” a picture of FOMC thinking about rates over the next two years, stayed at three cuts for 2024. Looking at the chart (the 2024 column), the median dot is 4.625%. That is a 75 basis […]

The Fed is Done Hiking – What Could Possibly Go Wrong?

Sometimes “bad news” is “good news.” That seemed to be the case on Friday when the jobs report came in weaker than expected. That, combined with the Fed’s continuing rate “pause” on Wednesday ignited the financial markets – both equities and bonds. Among the popular averages, the DJIA gained 5.1% on the week, the S&P […]

Data Not Conducive to Wall Street’s “Soft-Landing” Scenario

One of the two major economic/market events that occurred last week (week of August 20) was the stellar performance of Nvidia (NVDA) which, unlike the retailers, beat on both top and bottom lines and whose stock price has soared from a 112 low last October to a high print of nearly 503 early on Friday […]

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 […]

Will the Fed Cause Another Recession?

The Fed raised the Federal Funds Rate by 25 basis points (a quarter of a percentage point) to 1.0%.  This is the anchor rate on the yield curve, and, most other rates respond to it, with shorter rates today responding more than longer rates.  It appears from their communications that they intend to hike rates […]