Baker Market Update – wk220624
Bond prices continued to rally this week with the 3-year Treasury yield falling 24bp and the 10-year down 11bp as of this writing. On the short-end of the curve, 3- and 6-month bills rose 7bp and 24bp respectively. The yield curve has flattened sharply since mid last week as the market continues to “unwind” some […]
Baker Market Update – wk220617
As we approach the mid-point of the year, all eyes have been focused on the Fed and their “expeditious” determination to stamp out inflation. An enormous liquidity bubble created by the excessive buildup of reserves in the prior two years has conspired with the Treasury’s equally excessive fiscal support from stimulus checks, enhanced unemployment benefits […]
Baker Market Update – wk220610
More volatility in the bond market this week as Treasury yields edged higher and the curve flattened. The 2Yr T-Note increased over 30 basis points since Monday and currently yields 2.97%. Farther out, the 10Yr currently sits at 3.13% this morning which is around 15 basis points higher from last Friday’s close. The 30Yr long […]
Baker Market Update – wk220603
As the first week of summer began, Federal Reserve Vice-Chair Lael Brainard stuck to the script on aggressive monetary policy by clarifying her support for raising rates in 50bps chunks at the next two FOMC meetings, and tamping down speculation that there will be some sort of “pause” in September. That echoes Chairman Powell who […]
Baker Market Update – wk220527
This week showed a continuation of recent trends, with one exception. Economic reports continued to come in weaker than expected as the impact of higher rates began to spread through the economy. Inflation and inflation expectations continued to fall as the most severe effects of the pandemic continued to dissipate. Bond yields continued to fall […]
Baker Market Update – wk220520
Most financial markets got clobbered again this week as Fed Chairman Powell reiterated the Fed’s intention to raise interest rates as much as is necessary to break the back of inflation. The Dow, for example, lost another 1,000 points, failing to hold momentum from a mid-week rally. The bond market, however, was a notable exception. […]
Baker Market Update – wk220513
“No one here thinks that it will be easy” warned Federal Reserve Chairman Jerome Powell on Thursday as he discussed the notion of a soft landing when it comes to the US economy. He was confirmed in the Senate (80-19 vote) and will continue to lead the central bank’s campaign in fighting public enemy number […]
Baker Market Update – wk220506
Here in the great plains, the month of May is traditionally considered “storm season” when the likelihood of tornados and severe weather is at its height. The first week of the month has also been volatile and stormy for financial markets. Indeed, it seems none have been spared. Stocks, bonds, gold… every asset class got […]
Baker Market Update – wk220429
Stocks are weaker, the dollar is soaring, and bonds continue to range-trade as this week nears an end. The futures market is priced for a near 3% fed funds rate one year from now as policymakers stumble over themselves to telegraph how hawkish they are. Meanwhile, the Bureau of Economic Analysis reported yesterday that the […]
Baker Market Update – wk220422
Bond yields continued to march higher this week as Fed Chairman Jerome Powell reinforced expectations of aggressive tightening policy including a likely 50bps hike at the next FOMC meeting. Futures markets now project a fed funds rate of nearly 3.00% one year from now. Speaking on a panel with other central bankers, Powell said he […]
Baker Market Update – wk220414
It was a week of steepening for the yield curve. Two- and five-year Treasury yields drifted lower approximately ten basis points (2.40% and 2.69%) while the 10-year dropped four basis points (2.74%) and the long bond (30yr 2.85%) drifted higher five basis points as of Thursday morning. With the recent drop in shorter term yields […]
Baker Market Update – wk220408
One month ago, it cost the US Treasury 1.85% to borrow money for ten years. Now that cost is 2.69%, an 84bps difference. The increase for a two-year maturity has been even greater. The magnitude of this year’s rise in bond yields is profound no matter how you look at it. Even the sharp increase […]
Baker Market Update – wk220401
Today’s Employment Report all but ensures the Federal Reserve will hike rates by 50bp in May for the first time in 22 years. No, that’s not an April Fool’s joke, just my opinion based on a few factors: Job growth is strong. The economy added 431,000 jobs in March and although that was less than […]
Baker Market Update – wk220325
The equinox has come and gone and the end of the first quarter is near. And boy what a quarter it’s been. If lingering COVID effects were our only worry, life would be pretty good. But soaring inflation, now exacerbated by a commodities price surge courtesy of the war in Ukraine, has focused a spotlight […]
Baker Market Update – wk220318
This week March Madness arrived in every sense of the word. The ongoing war in Ukraine continues to send shockwaves through the world, including profound effects on financial, foreign exchange and commodities markets. In the midst of that angst, the Fed began a tightening campaign that’s been well telegraphed to markets, and is expected to […]