Baker Market Update – wk220617

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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 – wk220603

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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 – wk220520

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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 – wk220506

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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

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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

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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 – wk220408

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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 – wk220325

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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

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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 […]

Baker Market Update – wk220304

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Markets have a lot to digest this week, but geopolitics is front and center. It’s hard to know exactly how the situation in Ukraine will play out, but for now it’s extremely dangerous and that fact is being reflected in financial markets behavior. The news last night that Russian invasion forces had attacked and seized […]

Baker Market Update – wk220225

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Financial markets were roiled this week by the Russian invasion of Ukraine. Rather than a limited incursion in the eastern region of the country a broad-based invasion was launched into all of Ukraine, triggering volatile selloffs in risk assets and forcing money into safe havens like US Treasuries and gold. Energy and commodity markets soared, […]

Baker Market Update – wk220204

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If you thought the transition into 2022 was volatile for the bond market, hold on to your hat because the hits keep coming. The sustained upside inflation data from supply shocks, which was well noted last month by the newly aggressive Fed, has now been bolstered by a stunning upside surprise from the January employment […]

Baker Market Update – wk220114

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After starting the week near its highest level in two years, the 10yr T-Note yield seems to have settled down a bit, currently hovering around 1.75%. Three consecutive sessions saw lower yields this week and we’ll likely end the day with the first weekly drop in a month. Having jumped 25-30bps since New Year’s Day, […]

Baker Market Update – wk220107

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The first week of 2022 was not boring. Bond yields rose to levels not seen in more than a year, stocks fell sharply, and speculative assets got hammered. It seems the minutes of the Fed’s December policy meeting (released on Wednesday) got the attention of financial markets in a way that the actual post-meeting statement […]

The Fed’s Balancing Act for 2022

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On the first trading day of 2022 the US 10yr Treasury Note yield jumped above 1.60%, then traded up another 10bps in the two subsequent sessions. That was a 35bps increase in two weeks and aligned with a similar move higher for market measures of inflation expectations. The bond market hadn’t seen a worse start […]