Good Thursday AM from your Hometown Lender,

Happy Leap Day (is that a thing?)

Biggest data release day of the week with the Fed’s favorite inflation gauge, the PCE inflation report. I am happy to share, no surprises to the data. It came in across the board exactly where they were estimated to be, and that is good because markets have already accounted for and priced in the data. We would have been in a lot worse shape if it came in worse than expected, and in fact bonds have improved after the news came out with the 10-yr trading back to 4.23%. It appears traders breathed a sigh of relief that there were no surprises, taking a really weak open that would have made rate sheets worse and turning it around. Unemployment claims expected at 210k were a little worse at 215k which is certainly not hurting bonds.

Not atypical, there is an interest in what the Fed participants have to say in between meetings.

Three Federal Reserve officials said yesterday that the pace of interest-rate cuts will depend on incoming economic data. Boston Fed President Susan Collins and New York’s John Williams said the Fed’s first rate cut will likely be appropriate “later this year,” while Atlanta’s Raphael Bostic said he’s currently penciling in a cut for sometime this summer. We’ll hear from Bostic again today along with comments from Austan Goolsbee and Loretta Mester.

This was an interesting read from the WSJ…

A key contradiction about today’s economy: Sentiment surrounding the economy is very poor, even though the underlying data is strong. What gives? Last week, Jesse Newman and Heather Haddon supplied a likely answer: The discontent is stemming from mealtime. In 2022, consumers spent 11.3% of their disposable income on food, according to the most recent USDA data available. The last time Americans spent this much of their money on food, George H.W. Bush was in office, ‘Terminator 2: Judgment Day’ was in theaters and C+C Music Factory was rocking the Billboard charts.

Please remain safe and healthy, make today great!