Good Morning on this best day of the week from your Hometown Lender,
The data reports are getting more important as the week goes on. Today brought the ADP Private Payroll numbers, which was weaker than expected, and the Job Opening and Labor Turnover report (Jolts) which was also weaker than expected. Bonds started improving on the day with those releases.
Additionally, Federal Reserve Chair Jerome Powell is testifying at congress both today and tomorrow.
The remarks are released well before the testimony so congress can prepare their questions. Markets also get a chance to digest the commentary in advance so there are no surprises. Chairman Powell as he has continued to say, he expects interest rates to start coming down this year but is not ready yet to say when. “In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks,” he said. “The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” During today’s question-and-answer session with House Financial Services Committee members, Powell said he needs “see a little bit more data” before moving on rates. “We believe that our policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year, but the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured.”
A little bit later this am, news broke that New York Community Bank (NYCB) needs a cash infusion. The stock halted trading which is not the point. Moreso that regional banking is not out of the woods. NYCB is a division of Flagstar.
On all this news bonds are having a very good day.
The 10-yr is back to 4.10%. The rest of the week brings even more important data. Tomorrow is non-farm productivity and unemployment claims. Friday is the jobs report. I don’t suggest floating into big news as you never know which way it is going to go. We’ve had some good gains this week. Yes, if the rest of the data comes in weak, rates will improve further but if the data is stronger, rates will jump higher to where we came from.
Please remain safe and healthy, make today great!
