Treasury yields resume climb, J.P. Morgan flags risk of US2Y consolidating at 5%

Treasury yields resume climb, J.P. Morgan flags risk of US2Y consolidating at 5% for the third time this year. New York Fed president says he doesn't feel an urgency to cut interest rates. The longer-end 30-year yield rose 4 basis points to 4.75% on Thursday. The 2-year US2y yield hit the 5% level on Wednesday.

Rate Volatility's Market Implications

Higher-For-Longer Risk For Rates Drives Up Treasury Yields

Federal Reserve Chairman Jerome Powell on Tuesday conceded that inflation progress has stalled and the case for rate cuts has weakened. The 10-year Treasury yield is paying attention and rose to 4.67%, the highest since Nov. 6. The Treasury market has convinced the crowd to demand a higher yield.

Pre-FOMC: A Different Type Of Taper

The Federal Reserve is considering reducing the pace of quantitative tightening. The Fed's securities holdings have dropped from $8.5 trillion to $6.97 trillion. Kevin Flanagan says the Fed's ultimate goal is to have only Treasuries on its balance sheet. He says a "QT taper" is not on the immediate horizon.

A (Un)Certain Framework

The FOMC has shifted away from specific metrics and adopted a more ambiguous strategy. The Fed has been using a varied set of targets for monetary policy, but the relevance of these data points is questioned. The FomC's outlook for inflation has become increasingly tilted to the upside.

U.S. 10-year yield tops 4.7% as yields continue to push higher

U.S. 10-year yield tops 4.7% as yields continue to push higher. In April alone, the 10-Year Treasury yield has popped up 47 basis points. Treasury yields have exploded in April after inflation data and strong retail figures. The 10- years last topped 5% late last year.

Rate Cuts Off The Table For Near-Term Outlook: Futures Market

Fed funds futures indicate that interest rate cuts are unlikely in the months ahead. The policy-sensitive US 2-year Treasury yield has downgraded prospects for a near-term rate cut. The implied probability is heavily skewed toward no rate cuts for the next two FOMC meetings in May and June.

U.S. Household Spending Holds Firm

Retail sales beat all expectations. US retail sales rose a very robust 0.7% month-on-month in March versus 0.4% expected. With jobs, inflation, and activity all beating expectations, the Federal Reserve is in no position to cut interest rates. We expect spending and inflation to slow, but the Fed won't be contemplating rate cuts.

Earnings Growth Not Just About Tech

Treasury yield continue to jump as the 2Y tops 5% and the 10Y hits a 5-month high

Treasury yield continue to jump as the 2Y tops 5% and the 10Y hits a 5-month high on Monday morning. The U.S. 2-year Treasury yield reached its highest point since November 14th. Yields made a push higher on Monday after a hot retail sales report and rising geopolitical tensions.

Weekly Report: what happened at TLH last week (0408-0412)?

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U.S. Resilience Scuppers The Case For Early Rate Cuts

US economy continues to grow strongly, but inflation is running too high for comfort. Inflation is still higher than the Fed's 2% target. Business surveys suggest the economy is weaker than reported by official data. Ongoing strength means a June rate cut looks unlikely for the U.S.

Federal Reserve Policy Rate Path: An Evolving Picture

Strong economic data has led to significant shifts in market expectations for when the Federal Reserve will begin cutting policy rates. Financial market expectations have now shifted from six rate cuts to just two cuts this year. The first rate reduction is now expected to come in September. The Fed continues to expect to cut rates this year, but there is a risk to this forecast.

Flash Insights: March Inflation - Yet Another Reason To Delay Easing

US headline and core Consumer Price Index topped expectations - both rising 0.4%. Transportation, medical and other personal services largely drove the rise. Core goods CPI turned negative once again - down 0.2% m/m. On a six-month annualized basis, core CPI is now near 4%, while supercore CPI is above 6%.

2 Things About The PPI: March Seasonal Adjustments Were Huge, And 3-Month Rates All Jumped

Producer Price Index jumped by 6.2% annualized in March from February. The three-month rate of the PPI jumped 7.8% in March, the highest since June 2022. Seasonal adjustments in March were much larger than in the years before the pandemic. The PPI is seasonally adjusted, and all three- month rates all jumped in March.

Easy For Some, Harder For Most

The Federal Reserve Needs To Raise Interest Rates 0.25%

The Federal Reserve needs to raise their Fed funds target rate by 0.25% at their May 1 meeting. The Fed's 2% inflation target is considered optimal for economic growth and stability. Current interest rates are not historically high, and there is no need for a rate cut. Inflation figures are trending up and employment numbers are strong.

Beneath The Skin Of CPI Inflation, March: Inflation Behaves Very Badly, Saga Far From Over

Consumer Price Index for March was just as bad as in February. Inflation in "core services" jumped by 5.6% annualized in March from February. Ugly inflation in services drives up the 3-month overall CPI to worst since Nov 2022. The Fed has been in desperate search of confidence that inflation would cool after the Amazing Cooling.

Expect A Rate Cut In November Or None At All

Today's hotter-than-expected CPI all but eliminates the odds of a Fed rate cut in June. The likelihood of cuts between July and October is slim because the pace of change is too slow to justify a cut. We've made tremendous progress in the fight against inflation. The Fed should see a cut in November or none at all.