The Fed raised rates 25 basis points to 3.75%–4.00%, validating bond-market expectations as persistent inflation pushed Chair Warsh to finally ‘walk the walk’ on his hawkish rhetoric.
Outlook
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The Fed seems to be less inclined to push yields lower this time. In November 2023, it changed its statement to refer to “tighter financial and credit conditions”, rather than just “tighter credit conditions”.
The Health Care sector is showing renewed momentum after several years of relative underperformance. While the sector’s recent outperformance during market volatility may look characteristically defensive, its longer-term opportunity is increasingly being tied to innovation.
Stocks were mixed last week as markets continued to navigate geopolitical concerns and new signals about short-term interest rates.
There is the idea that energy is destiny. If this is true, the major countries of North America each have circumstances to contemplate when considering their future energy needs.
A hawkish Warsh speech lifts Fed hike odds, Canada records broad second-quarter gains, and Australia’s July inflation data strengthens expectations for another rate hike as September comes into view.
The most important thing heading into this week is not only the economic data and its potential impact on the Fed’s September rate decision and Treasury rates, but also Broadcom’s results
Last week, yields on bonds issued by sovereign governments around the world rose to multi-year highs, including in Japan and throughout Europe.
The number-one story in the financial markets of late has been the run-up in longer-dated Treasury (UST) yields - which have climbed back to levels not seen since before the 2007 Financial Crisis.
Recently, our national debt passed the $40 trillion mark, which is $90,000 per head. The more important question is whether the economy grows faster than the cost of servicing that debt.
US inflation data supports a Fed pause through year-end, while UK growth loses momentum and the RBA maintains a hawkish hold amid housing concerns.
Crude prices are rising on renewed geopolitical tensions triggered by President Trump threatening Oman with military strikes and communicating that he is in no rush to end the Iran war.