Good Thursday AM, from your Hometown Lender,

A little bit of economic news and more Fedspeak…

Unemployment claims in about where expected, Philly Fed Manufacturing Survey blew past expectations with insight that manufacturing in the Northeast is increasing.

The Fed is back in unison saying don’t expect rate cuts anytime soon.

Federal Reserve Chair Powell said that any cuts this year are in question, barring a sudden economic slowdown. “We think policy is well-positioned to handle the risks that we face,” Powell said. “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work.” Loretta Mester reiterated that interest rates can be held steady and there is no need to rush to cuts. Michelle Bowman added that progress on inflation may have stalled and questioned how much tighter monetary policy is restraining the economy.

While this is going on, the ECB has telegraphed they will cut rates in June.

It is unfortunate but it is where we are. The silver lining is that the spreads between treasuries and mortgage rates have narrowed quite a bit so despite the 10-yr being back to last October levels. Back in October, the 10-yr at 4.6, rates were pushing 7.5%, today most rates are still in the upper 6’s. We are going to be rangebound until some news comes changing the markets interpretation of the Fed’s future. I am still bullish on bonds. I see lots of reasons the Fed will have to cut. The below chart is what economists polled by the WSJ seem to think.  

Stay safe and make today great!