Good Wednesday morning from your hometown lender, on this best day of the week,

This is Fed day…

Markets are primed and ready for the Fed to speak of when they will be cutting rates. No one is expecting a cut today, but will it be March? Markets seem to be back on that bone for the moment.

Bonds have improved over the past few days and the 10-yr is now back below 4.00% at 3.97%.

A little data out today has juiced today’s improvement in bonds. ADP payrolls dropped like a rock and was below expectations (which were already low) as well as the employment cost index which also missed to the downside.

Just to set the table…

The majority of Fed officials have pushed back on the market betting on a first cut coming in March. Yesterday, the expectation was a 40% chance of a March cut; however, as of this morning while I am typing, that expectation has jumped to 62%.

Really, if not March, it will likely be May and markets seem to be ok with that too.

It is tough to bet against the Fed though. Chair Jerome Powell, who will hold a press conference following the decision, may use that to reiterate the message that while recent declines in inflation are encouraging, there is little urgency to start cutting given ongoing labor market strength and robust economic growth.

We will hear the decision at 11am.

Please stay safe and healthy, and make today great!