The View from 5th Avenue

The markets chopped all day as a hawkish leaning ADP and JOLTS were offset by a dovish Powell tweak in which he said everything remains data dependent. Mr. P did largely reiterate his remarks from yesterday, but the fact remains that “the US economy has been remarkably resilient to higher rates” and that gives our friends at The Fed more ammunition for a 50-bp rate hike later this month. ADP came in better than expected at 242k (vs. 200k) and prompted a bit of short covering and Treasuries. How…

And it’s only his first day of his testimony. Yesterday’s price action in the markets was a good foretelling of what was to come. Stocks could not hold onto early gains ahead of Powell’s testimony to Congress, and when he did speak today, he did not mince words. “Economy’s strength suggests peak rate will be higher than previously anticipated” and, “Fed is prepared to speed up rate rises if warranted”. CME data had a 72% expectation for a 25bps rise on March 22 pre-Powell, it stood at 64% for 5…

Today was a good day to…look ahead to the rest of the week. Maybe it was having CNBC morning staple Joe Kernan on in the afternoon that threw the day off. Unlikely excuse but today left us grasping for straws some as markets seemed to similarly shrug off the start to the week. The momentum created from last week’s unexpected thrust higher carried over to today, at least at the start. Factory and durable goods orders reported inline and most importantly, didn’t signal extensive growth, that bala…

We had an internal team-building exercise this week, culminating in a task where everyone was tasked with performing a motivational speech about some ridiculous topic on the spot. Awkward much? (I had to ‘motivate’ a team of baby Yodas to win a soccer match to give you an idea.) Some of the overarching themes of the exercise were to get comfortable with being uncomfortable and overcommunication. One would almost think the Fed was taking a page from this playbook. Non-voting and voting members a…

Let’s call it the “Bostic bounce”. Atlanta Fed President Raphael Bostic said that the Fed could be in a position to pause rate hikes come summer. Markets immediately responded and ticked to the upside, as his comments were seen as dovish. The SPX (+0.76%) and NDX (+0.89%) pared earlier losses and finished strong into the close. But is today’s bounce justified? Keep in mind that Bostic is currently a non-voting member of the interest-rate committee and almost all previous members who have spoken…

U.S. stock futures edged higher this morning to usher in the new month. March supposedly heralds spring, a rebirth, a new dawn. But, markets remained unable to skirt the major theme that has clutched the heart of 2023 thus far – inflation (just as it did in ‘22!). Signs that China’s economy is rebounding via their monster PMI print last night spurred a rally in Hong Kong, but did little in the way of spilling that confidence over to the US, as this morning’s ISM Prices Paid rose to 51.3 from th…

The shortest month of the year is now behind investors and markets have bent, but not broken (yet) the work they did in January. The last couple of trading sessions of any month always gets the added element of positioning, and today was no different. After a sluggish start, equites rallied after economic data showed some deterioration once again. The weaker data did not change the Fed rate trajectory, but manufacturing (Richmond Fed/ MNI Chicago PMI) declined sequentially, and Consumer Confide…

Markets are grasping at any piece of economic data to determine their trajectory for the day. After major indexes suffered the worst week of the year, they started this week out differently with both the SPX (+0.31%) and NDX (+0.74%) closing in the green. It was once again soft economic data that pushed the indexes higher as US durable goods orders were down 4.5 percent (est. -4%). In the face of “higher for longer” interest rates, traders are looking for any sign that could point to weakness i…

Economic data is not your financial assets friend and doesn’t look like it will be for the foreseeable future. PCE data has been on everyone’s radar since January CPI was released two weeks ago. To the Fed’s dismay, the data continues to disappoint. After a three-month sequential decline, core PCE YoY is back up to 4.7% (est. 4.3%) and MoM increased 0.6% (est. 0.4%). The consumer is strong, people have money and are willing to spend it. Personal spending jumped 1.8%, which is the largest increa…

February has been a month of repricing expectations on a few levels. As macro data has shown to be resilient, so has the Fed’s resolve, and investors have had to amend positions for a higher for longer trajectory. Treasuries have seen the most aggressive repositioning this month, as the 10-yr yield have moved to 3.88% from 3.42% when the FOMC last met (February 1st). Stocks continue to hold up however, even though they have tested some support levels this week. The genesis of the Streets rethin…