Good Monday Afternoon from your Hometown Lender,

Not much on tap today.

We had a purchasing managers release which was a tad bit stronger than markets expected but mostly in line.

Bonds started in a hole and have not been able to claw out. Why?

Well, markets were with good reason, eyeing Chairman Powell’s speech today for any glimpse into the future path of Fed rate cuts. It can always create volatility when the Fed Chairman takes the mic. Over the last weeks, traders have made bets on how much more the Fed will cut this year and bond yields show that the bets are about 75bps between now and December. Today Mr. Powell poured a little rain on those plans as he said the likely path is two more cuts of .25% at the November and December. Well if markets have priced in 75basis points and the Fed is now saying we will only get 50 bps, you can expect that rates will sell off a bit, which is what we are seeing right now.

There’s a lot of data still to come this week with the biggest economic report of the month on Friday, the jobs report. I think we will continue to stay in this range until Friday and then I would expect some volatility.

Stay safe and make today great!