Good Tuesday AM from your Hometown Lender,

There is a little data out today (ISM and factory orders) which came in weaker than expected.

Neither one is a top tier data set but none the less, markets are responding well bringing the 10-yr down to 4.15%. Today was a prelude and tomorrow we start to get into the thick of it with a couple of labor reports (ADP private payrolls and JOLTS – job openings and labor turnover survey) along with day 1-of-2 days of Fed Chair Jerome Powell’s testimony in front of Congress. If we see some signs that the labor market is weaker than we’ve been led to believe up till now, it could help rates fall. The pressure continues to mount Thursday and Friday with data on Job Cuts, the ECB rate decision (no change forthcoming), unemployment claims on Thursday, and then the biggest report of the month Friday, the Bureau of Labor Statistics (BLS) jobs data. It Is never recommended to float into big news events as the outcome and markets are unpredictable.

Here is the word of caution and to not bet against the Fed.

Tomorrow, Fed Chair Powell heads to Capitol Hill for his semiannual testimony before Congress, where he is expected to maintain a hawkish stance and signal the Fed is in no hurry to cut interest rates. That lack of urgency was highlighted by Atlanta Fed President Raphael Bostic, who said he expects the first cut — which he has penciled in for the third quarter — to be followed by a pause. Futures markets are currently looking at the first Fed cut in June or July, and pricing in just over 80 basis points worth of easing in 2024, which translates into about three reductions. The rate-setting committee will update its forecasts for rates at the next meeting on March 19-20.

On the positive side…

Bond traders are laying down market-moving wagers hours ahead of key U.S. economic data releases. Bond futures typically swing 0.14 percentage point in reaction to seven key economic releases. Nearly half of that move has already happened before the data comes out, kicking off up to six hours ahead of the scheduled announcement. That marks a shift from earlier years when preliminary moves tended to concentrate in the half-hour or so before the data. Insider trading? Doubtful… just more risk taking I assume.

Please stay safe and healthy, make today great!