When “Bad News” Becomes “Good News”

While Tuesday’s Producer Price Index (PPI) for April came in hotter than expected (+0.5%), markets took the bad data in stride, perhaps because the year/year change on the headline index was still only 2.2% (2.4% for the “core,” i.e., ex-food and energy). Another reason for the lack of market volatility from the release may have […]

A Slower Economy, Lower Inflation The Odds of a June Rate Cut Are Significant

During the last week in March, there were several significant foreclosures (hundreds of millions of dollars per property). They included properties in SanFrancisco and Mountain View, CA, a large complex in Washingdon, D.C., and a medical office building (still under construction) in the southern part of Florida.   Leveraged loan delinquencies now exceed 6% (normal is […]

“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 […]