Good Monday morning from your Hometown Lender,

Last week didn’t end as we had hoped it would.

I am still scratching my head at the reaction to the jobs report which did show a bit more jobs created than was expected, but was substantially lower than the previous month, and the backward revisions outweighed the stronger report. None the less, the traders decided that despite no inflation and several other reports showing weak employment (and the jobs report was weak in the overall picture, see below), bond yields rose a bunch, If we take a step back and recall last August (2024) when markets knew the Fed was going to start cutting, the 10-yr yield had dropped to 3.62%. Today after 100bps of cuts and being on the cusp of a recession, the 10-yr note has a yield of 4.50%. It doesn’t make sense other than to say, money wants to be invested elsewhere.

Needless to say it is and has been a tough market to predict.

This is a moderately busy week for data.

The most important being the CPI report on Wednesday and PPI on Thursday. Those inflation reports will be front and center for next week’s Fed meeting. I expect them to show very low inflation.

On this day in 1943, Americans’ paychecks went on a sudden diet as federal income tax withholding was implemented for the first time. Originally proposed by Beardsley Ruml, an executive at Macy’s department store who had encouraged shoppers to buy on the installment plan, withholding was cleverly called “pay as you go.” The public backed it, forever after giving the federal government interest-free financing.

Stay safe and make today great!

Stay safe and make today great!