Markets getting support despite lack of data

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Published Date 2/23/2024

There isn’t any economic news today and not much other news that has an impact on rates. There were no direct tier one data points all week, the 10 year note at 9 am this morning +4 bps from last Friday. FNMA 6.0 30 year coupon at 9 am +3 bps from last Friday.

More from Fed officials but nothing new. By now there should be no debate about what the fed is thinking, every Fed official that has spoken over the last couple of weeks have followed the same script, the Fed is likely to lower rates later this year but well into the year IF inflation declines from present levels. Markets and the Fed surprised last week that January CPI and PPI inflation increased rather than declined adding more conviction the Fed is in no hurry to begin lowering rates until there is more evidence inflation is slowing.

Yesterday Fed Governor Christopher Waller said he will need to see more evidence that inflation is cooling before he is willing to support rate cuts, saying ”What’s the rush.” “Last week’s high reading on CPI inflation may just be a bump in the road, but it also may be a warning that the considerable progress on inflation over the past year may be stalling.” He referred to annual GDP at +3.3% and strong employment that may keep the economy growing with no recession in sight. “That makes the decision to be patient on beginning to ease policy simpler than it might be,” … “I am going to need to see at least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole.” Waller pointed to January CPI core inflation at 3.9% increased 0.4% in the month. He further offered his outlook for February PCE core inflation would decline to 2.8% year/year (released next Thursday).

Here is what Goldman Sachs is saying this morning; “Because there are only two rounds of inflation data and a little over two months until the May FOMC meeting, his (Waller) comments suggest to us that a rate cut as early as May, which we had previously expected, is unlikely.”

At 9:30 am the DJIA opened +101, NASDAQ +75, S&P +20. 10 year at 9:30 am 4.31% -1 bp. FNMA 6.0 30 year coupon at 9:30 am -1 bp from yesterday’s close and +9 bps from 9:30 am yesterday.

The 10 year note at 10 am 4.30% -3 bps, FNMA 6.0 30 year coupon +8 bps and +18 bps from 9:30 am yesterday.

Source: TBWS

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