Good Thursday AM from your hometown lender,

Today brought some data, and while unemployment claims were better, they are still worse than the average has been, which points to a softening labor market. The bigger picture those was a downward revision to GDP. It was already negative at -.1 but today’s revision pushed that down to -.5. I cannot understand the Fed continuing to be on-hold as the economy is undoubtedly slowing. Mr Trump is dialing up the rhetoric on Mr. Powell and while he will not replace him before May when Mr. Powell’s term expires, he is considering hiring his replacement soon to put pressure on the Fed Chair. 

Here is a quick snippet from the WSJ:

In recent weeks, the president has toyed with the idea of selecting and announcing Powell’s replacement by September or October, according to people familiar with the matter. One of these people said the president’s ire toward Powell could prompt an even-earlier announcement sometime this summer. Because the new chair wouldn’t take office until next May, announcing the pick this summer or fall would be far earlier than the traditional three-to-four month transition period. An early announcement could allow the chair-in-waiting to influence investor expectations about the likely path for rates, like a backseat driver, attempting to steer monetary policy before Powell’s term ends.

On the ceasefire in the Middle East, the US reasserting itself as the world power, and no inflation from tariffs yet (emphasis on the last part), bonds have been improving several days in a row. We are now in a downward channel and assuming we can hold today’s gains (the 10-yr note yield is down to 4.27%) after tomorrow’s PCE report (that could be the fly in the ointment), rates should improve another .125.

Keep fingers crossed.

Stay safe and make today great!