Short Term

Oil turns in eighth monthly drop in last nine months in February–but better times may be ahead

Oil turns in eighth monthly drop in last nine months in February–but better times may be ahead

Oil prices fell again in February with crude dropping another $2 a barrel on the month. Crude prices really didn’t show much of a trend in February as worries over an economic slowdown caused by higher interest rates battled signs of tighter supply. The reading range for the month was the smallest since July 2021. Signs of increased demand from China and the continued bite of sanctions against Russia point to gains for oil in coming months.

The best way to get a 5% yield–my choices and their pluses and minuses

The best way to get a 5% yield–my choices and their pluses and minuses

Remember the good ol’ days when Treasuries paid 0% or so and you had to give a bank your toaster to open an account, paying 0.01%? Right now you can find a CD paying 5%–and it doesn’t require locking up your money until the sun goes super-nova either.
Today, the 12-month Treasury closed with a yield of 4.99%. And the 6-month bill paid an even higher 5.02? You can find a bond ETF with an SEC yield of 4.63%. And even a money market fund paying 4.45%. What’s the case for stashing some of your cash in something “safe” as the stock market looks like it’s about to go into one of its periods of volatility? And what’s the best choice when you’ve suddenly got so many vehicles offering to pay you 5% or so? In today’s post, I’ll sketch out the pluses and minuses of these alternatives.

Please watch my new YouTube video: Beware the Dot Plot

Please watch my new YouTube video: Beware the Dot Plot

My one-hundredth-and-thirty-ninth YouTube video “Beware the Dot Plot” went up today. The next Fed meeting is June 15, and I think there isn’t much to worry about in terms of a coming rate increase (we know it will be 50 basis points, which the market has priced in). What you do need to look out for, however, is the Dot Plot. This communicates Fed members’ expectations for growth and inflation in the coming years, and if they foresee stickier inflation AND slower economic growth, the market won’t be happy.

Treasury yields toy with 3% ahead of Wednesday Fed meeting

Treasury yields toy with 3% ahead of Wednesday Fed meeting

Economists surveyed by Bloomberg project the Federal Reserve will hike its benchmark short-term interest rate by 50 basis points on Wednesday in an effort to damp inflation. And bond traders have just decided that the U.S.central bank will raise rates by 75 basis points at its June 15 meeting. The CME Fed Watch Tool, which uses prices in the Fed Funds Futures market to calculate odds of a fed move, puts the odds of a 50 basis point increase from the current 0.25% to 0.50% to 0.50 to 0.75% at 99.8%. That tool puts the odds of a 75 basis point increase air the June 15 meeting at 87%. That’s up from odds for just 18% on April 1. Bond prices are down and bond yields are up today.

The U.S. economy shrank at a 1.4% rate in the first quarter; stocks surge

The U.S. economy shrank at a 1.4% rate in the first quarter; stocks surge

The U.S. economy unexpectedly shrank at a 1.4% annualized rate in the first quarter of 2022, the Bureau of Economic Analysis reported Thursday, April 28. The first quarter results follow on a 6.9% rate in the fourth quarter. Economists had projected a 1% tate of growth for the quarter. But since Wall Street was already expecting a big slowdown in growth for the quarter and because a peek below the headline numbers argued that the lower growth rate would be temporary, stocks surged on Thursday.

China tries old play book to stimulate economy

China tries old play book to stimulate economy

China’s President Xi Jinping has vowed to boost China’s economy, struggling under the impact of widespread Covid-19 lockdowns and a collapse in the property development sector, by pushing more infrastructure spending into the economy. This has been China’s tried and true first response to faltering growth. But this time it seems unlikely to work.