Market Commentary
November 13, 2023
Last week was a pretty light week in terms of data. We had the trade deficit, University of Michigan long term inflation expectations (sounds important, but the Fed doesn’t put a lot of weight on it), and Initial Jobless Claims. Jobless claims fell a little for the week, but increased a little on a four week average. While the Fed likes to see this increase and there are signs it is taking longer to find work, the pace of layoffs is slow suggesting we are still in a tight labor market. Nothing in this data would signal the Fed needs to move rates up, but it did push out the probability of a rate cut, based on the futures market, from May to June 2024.
The 10yr rose a little to 4.622. The economic data didn’t move the needle much though, it was a poorly bid 30yr treasury auction. Heading into last Thursday, the 10yr drifted down to 4.50 and the equities market, in terms of the S&P 500, was one win away from it’s longest win streak in 19 years, however, the poor auction caused bond prices to go down/rates to go up and crushed the equities rally. At the end of Thursday the 10yr yield was up about 10 bps.
The 10yr weekly average closed at 4.59 which means the Expected Rate will be another eighth lower this week.
Have a great week!