Wednesday’s 10-year Treasury auction was met with solid demand. More interestingly, the demand is not coming from the Fed’s 25 primary dealers. The number of bids in the auction outweighed the number of bonds being auctioned by 2.66x. The six-month average is 2.39x. Further, the yield on the auctioned bonds was 3bps below where the […]
As we start 2023, the challenge this year for investors appears to be whether we rely on bearish fundamentals or bullish technicals. Forecasting market direction becomes easier when technicals and fundamentals are in alignment. However, investing can be very challenging in periods like the last few months of 2022 and the beginning of 2023, where […]
Yesterday, U.S. Treasury Secretary Janet Yellen stated: “You don’t have a recession when you have the lowest unemployment rate in 53 years.” While such a statement sounds logical, history argues a recession could be right around the corner despite record-low unemployment. Janet Yellen may want to study the graph below closely. The unemployment rate always […]
The graphs below point to a potential problem for corporate bond investors. The graph on the left highlights that as banks tighten lending standards, corporate defaults rates tend to rise about nine months later. Bank lending standards are tightening rapidly. The graph provides credence to a topic we have spent a lot of time, the […]
Apple missed earnings estimates for the first time in seven years or the last 28 quarterly earnings reports. Weighing on Apple earnings was a 5.5% year-over-year decline in sales led by a 29% decline in Mac sales and an 8% fall in iPhone sales. Earnings per share at Apple were $1.88 vs. $1.94, as expected. […]
Heading into today’s BLS employment report, it’s worth summarizing other recent labor market data. Keep in mind, the BLS employment report and the jobs data we review below is of utmost importance to the Fed as they remain hawkish in fear of a price-wage spiral. ADP shows a marked slow down in job growth. 106k […]
As expected, the FOMC increased the Fed Funds rate by 25bps to 4.50%. They also anticipate that “ongoing increases in the target range will be appropriate.” Doing so would likely leave the Fed Funds rate at 5.00% or higher when they stop hiking rates. If all goes according to the Fed’s plan, markets could get […]
At 2 pm ET, the FOMC releases its Fed Funds rate decision, and Powell will hold a press conference afterward. To help guide you through what might be a volatile afternoon trading session, we present ING’s FOMC cheat sheet, followed by our thoughts. ING presents four scenarios for how the Fed characterizes inflation, growth, interest […]
While only a month into the new year, 2023 has been marked by a sector rotation that has mainly been opposite of last year’s rotation trends. Thus far, consumer staples, utilities, and healthcare stocks are underperforming the S&P 500 by about 8%. In 2022, those three sectors outperformed as investor rotations focused on conservative, dividend, […]