Chairman Powell's recent comments suggest that the Fed may not be skipping the pause and could be serious about raising the Fed Funds Rate as soon as this month's policy meeting.
WisdomTree
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The Fed was guiding the markets into thinking this was potentially the last rate hike in this cycle.
The debt ceiling saga is unfortunately still ongoing, but definitive progress has been made. According to reports, the Biden Administration and Congressional Republican negotiators have agreed to a debt ceiling/budget deal.
After last week's slew of second-tier data, it seemed as if the Treasury market had made up its mind-the economy is finally turning over and headed toward a recession sooner rather than later.
Investors are still waiting for signs of that recession, with recent economic data showing increasing evidence of slowing activity and tighter lending conditions.
The US Treasury market experienced some unusual trading activity, with the UST 2-Year yield surging by 70 bps in February and then tacking on another post-Powell increase of 25 bps, reaching a peak of 5.07%, the first time eclipsing the '5%' threshold since 2007.
Microsoft's investment in OpenAI and its plan to incorporate GPT-4 into Office 365 has the potential to add tens of billions of dollars in incremental annual revenue.
Quality stocks have historically exhibited higher long-term returns and lower volatility, creating an attractive risk-return profile for core holdings in investors' portfolios.
While inflation may have peaked last summer, the future road may not be a one-way street to the downside, and the Fed will continue to operate under the assumption it 'has more work to do' to bring inflation under control.
The jobs report, to begin with, was a direct challenge to the 'inevitable recession' narrative, with the completely unexpected surge of more than a half-million new jobs being created in January, combined with the lowest unemployment rate since 1969.
The recent blockbuster jobs report has also created a narrative that perhaps the Fed can achieve the ever- elusive 'soft landing.' However, as I write this blog post, the consensus is still projecting negative GDP to show up in the second and third quarters of this year.
Warmer-than-normal temperatures have reduced natural gas demand in the U.S. and Europe, leading to a decline in prices. However, have prices fallen too much in response?