Good Monday AM from you Hometown Lender,

Oy Veh

Equites tanking all over the world and bonds taking it on the chin at the same time with the 10yr at 4.13% and mortgage bonds -40bps. At the same time, Oil is dropping and was down below $60/barrel for a minute. Why? Equities are worried about a recession (I am seeing several reports claiming we are in a recession now which I don’t necessarily disagree with) and bonds are worried about inflation. Dropping Oil prices will help with inflation and points to lower growth. The Fed is also now expected to cut at least 100bps this year. A big change from just two weeks ago when the expectations were 25 to 50 basis pointcuts. If we take a snapshot of where markets are right now, 11 Trillion (with a T) of global market value has been erased over the past 10 days. Rate sheets today will be worse than Friday and reprice risk on the day is moderate.

Here is an short yet on point excerpt from Bloomberg..

President Donald Trump dismissed investors’ fears of inflation and recession, defending his tariff plans unveiled last week. “I don’t want anything to go down, but sometimes you have to take medicine to fix something,” Trump said over the weekend. Investors aren’t crazy for what he’s prescribed.

JPMorgan Chief Executive Officer Jamie Dimon said tariff policy issues need to be resolved quickly. Bill Ackman, an ally of the president, said the levies are a “mistake” and urged Trump to call a 90-day time out. Another hedge fund billionaire joined in on the criticism. Elon Musk called for a “zero-tariff” system between the US and Europe that would effectively create “a free-trade zone.”

And attention is turning to the Fed. While investors are piling into US bonds, Goldman Sachs, UBS and TD Securities pulled forward their Fed easing expectations, going so far as to say the 10-year Treasury yield could drop to 3% this year. Meanwhile, market bets show an expectation the central bank will cut interest rates another five times this year, from just three last week. Goldman also raised its recession probability.

Here are a couple of graphs worth sharing.

The first is where the market expects the Fed to go. The second is where the Atlanta Fed sees the economy going

Stay safe and make today great!