Good Tuesday Afternoon from your Hometown Lender,

Bonds are clawing back to unchanged on the day mostly because Consumer Confidence report tanked today.

The worst drop since before the pandemic… The bond yields we care about are still a way off the best levels they’ve seen right before the Fed announcement last week.

The 10-yr is at 3.74% and had been below 3.60%. Why?

Well, there is no clear path markets can agree the Fed will take.

After the Fed last week made its first half percentage point rate cut since 2008, officials have indicated mixed views on how to proceed. Speaking to CNBC on Monday, Minneapolis Fed President Neel Kashkari suggested the central bank could go back to its more traditional 25 basis point moves. Kashkari, who is not a voting member this year, said he expects “we will probably take smaller steps unless the data changes materially.” Speaking separately Monday, Atlanta Fed President Raphael Bostic, a voting member, suggested the Fed could be less cautious, saying as of now he expects to be “normalizing monetary policy sooner than I thought would be appropriate even a few months ago.”

Last night…

China’s central bank unveiled a blitz of monetary stimulus measures designed to boost the economy and the country’s embattled property market. The PBOC cut a key interest rate and plans to reduce the amount of money banks need to hold in reserve in order to boost lending, all alongside a package of measures to shore up the property sector. The moves sent shares in China soaring and bond yields rebounded.

This feels like we will be in this trading range for a bit although we do get the Fed’s favorite inflation gauge, the PCE on Friday.

Stay safe and first make today great!