Happy Friday the 13th from your Hometown Lender,
We have seen this show before.
Markets improve on reasonable expectations based on the data. The Fed comments dial back expectations. New data supports Fed hawkishness, bonds sell off and rates move higher. That is what we have seen in the past 10 days. The 10yr was at 4.18% is now at 4.40%. you can do the math too. Almost .25% higher in rate based on Fedspeak and some marginally stronger data.
Next week brings the final Fed meeting for the year.
Markets had been 98% expecting a .25% rate cut but have since pared that back a bit (which is also why rates jumped a bit this week). The rate cut will be important to the market and the commentary after the meeting will be even more so. I think the Fed does cut but they also lay the groundwork for a pause. If that is the way it ends up, I don’t think we will see much relief from the cut. I think we must look at the fact that the data has been stronger of late and that is before any policies are in place from the new administration. I am typically a glass half full guy so my spin is that is good we can recognize and plan for the possibility rates have normalized already.
I thought the below graph was interesting…More people are staying out of work for longer.
