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Market Moment

  • November 14, 2019 Jobless Claims Up; So Are Bond Prices by Lester Murray

    The weekly count of Initial Jobless Claims came out this morning and its unexpected rise to 225k from 211k might be in part to "blame" for a continuation of yesterday's bond rally.  So far, Ten-Year Treasuries are up about a half-point and that takes the yield down to 1.82%.  It wasn't a huge miss, but IJC is one of the few labor related statistics considered to be a leading indicator.  That, along with Mr. Powell's expressed concerns about the Labor Force Participation Rate have ginned up fresh concerns about the vitality of the job market.

    Wholesale inflation via the Producer Price Index was also released today and, year-over-year, core PPI fell from 2% to 1.6%.  The headline rate went from 1.4% to 1.1%.  Both measurements came in slightly higher than pre-release estimates.  The second day of Mr. Powell's congressional testimony continues today.

  • November 13, 2019 Inflation Misses a Little; Bonds Like it a Lot by Lester Murray

    Earlier this morning, the Bureau of Labor Statistics reported that core inflation, as measured by the Consumer Price Index without Food & Energy, rose by the expected 0.2% last month.  Despite that, the year-over-year tally fell by 0.1% to 2.3%.  The more inclusive "headline" rate rose by a greater-than-expected 0.4% and that pushed the year-over-year rate to 1.8% from 1.7%.  So, core inflation fell while headline inflation was nudged upward a touch.
    Neither measure was far off of pre-release estimates, but that was all bond investors needed to spark an early morning rally.  Ten-Year Treasuries are up just over a half-point in price and that produces a yield of around 1.86%; a handful of basis points lower than yesterday.

    Also out today was inflation-adjusted wage data as Real Average Hourly Earnings posted an October gain of 1.2%.  A similar measurement for weekly compensation notched a pick-up of 0.9%.

    And surely unrelated, the House of Representatives begins its public impeachment hearings today.
  • November 7, 2019 Perceived Trade Progress Pushes Bonds Down by Lester Murray

    Details are a little sketchy, but news that China and the U.S. may both phase-out tariffs as part of the Phase One trade agreement has boosted yields across the Treasury curve in early trading.  The closely watched Ten-Year has lost about a half-point in price as its yield has moved up to just below 1.90%.  As one might expect, equity markets are set to open on a positive "up" note.  

  • October 31, 2019 New China News Not Really New by Lester Murray

    After yesterday's surprise-less FOMC meeting, investors greet this morning with anecdotal news stories chronicling new doubts Chinese officials are having about reaching a long-term trade agreement with America.  Is that news?

    It doesn't really matter; bonds like it.  Higher bond prices this morning have pushed the yield of Ten-Year Treasuries down to around 1.73% with not much change in the short end.  A slate of economic data was released this morning and that may be helping.  Personal Spending rose by 0.2%. slightly less than expected, while Personal Income rose by the estimated 0.3% last month.  Chairman Powell's multiple references to "muted" inflation yesterday were backed up by this morning's report from the Bureau of Economic Analysis with its latest calculation of the Personal Consumption Expenditures Index.  Without food & energy, core PCE was unchanged in September with the year-over-year rate falling from 1.8% to 1.7%.  Muted.  The all-inclusive headline PCE was also unchanged for the month with its year-over-year rate falling from 1.4% to 1.3%.  Also muted.

    Tomorrow is Jobs day.

  • October 30, 2019 Fed Cuts; Market Yawns by Lester Murray

    As expected, the FOMC cut its policy rate range by the expected 25 basis points. If anyone was expecting any surprises in the Committee's written statement, there weren't any. Also not surprising were the reprised dissenting votes cast by Eric Rosengren and Esther George. They apparently didn't like this rate cut any more than they liked the last one.

    With this rate cut having become a foregone conclusion in recent weeks, the "news" that investors were hoping for was some clarification on how the Committee might be considering further policy changes. No such revelations were evident in the statement other than the following:  "The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses he appropriate path of the target range for the federal funds rate."  

    In his press conference, Chairman Powell remarked that he believes that monetary policy is in a good place. He also said, perhaps puzzlingly, that he wasn't thinking about raising rates right now. Is there anyone besides Eric and Esther that's thinking that?  Market reactions have been muted with Treasury bonds holding on to the day's previous price gains.  The Ten-Year's yield has dropped a touch to 1.78%

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