Good Thursday AM,

Bonds had a great day yesterday on some muted Fedspeak (I don’t know I have ever defined Fedspeak but it is simply the public commentary from high level Fed officials). Some Fed members are calling for slower rate hikes which the market expects, and is frankly driving. It has taken the 10-yr Treasury down to yield 3.39% almost 100 basis points lower than where it was just a month ago. Some data out today which for the most part was less bad than expected. That is the right phraseology when the data is weak but not as weak as expected. Based on that and the follow through buying from yesterday bonds are holding their own. Mostly flat on the day.

If you count beans as I do, here is a glimpse at today’s data:  

• Initial Claims 190K vs 214K
• Philly Fed Mfg -8.9 vs -11
• Building Permit 1.33M on expectations of 1.37M
• Housing Starts 1.382M on expectations of 1.359M

And so it begins, the Fed Gang is not walking in lock step anymore.

Policy makers are starting to show differing opinions on the path for US interest rates this year. Two voting regional governors have backed moderating the pace of rate rises, while two other Fed officials have stated a preference for additional hikes. Dallas Fed President Lorie Logan and Philadelphia Fed chief Patrick Harker laid out the case for easing the Fed’s hiking campaign in comments on Wednesday, which followed a weak retail sales report. Meanwhile, St. Louis Fed chief James Bullard and Loretta Mester of the Cleveland Fed — also speaking on Wednesday — stressed the need to keep policy restrictive for longer. Markets see this alone as a positive. Tough to be aggressive without a consensus.

And along with the Fed, there are signs of other central banks slowing down on rate hikes, coupled with a slew of downbeat data. This is also adding to the big buy going on in bonds. The rush to safer assets is fueling the best start to a year for bond returns and sparking a more than half-trillion dollar boom in debt sales by governments and corporates around the globe. Let’s hope this continues. Rates should be improving even further as markets normalize.

Please remain safe and stay healthy, make today great!