Markets increasingly think Fed’s end of bond buying will be no big deal

Markets increasingly think Fed’s end of bond buying will be no big deal

I wouldn’t call it the consensus yet, but financial market thinking seems headed toward a belief that the end of the Fed’s $120 billion a month in purchases of Treasuries and mortgage backed assets won’t be a big deal. Certainly not enough to upset the bond market or produce another temper tantrum. The belief hinges on forecast of demand and supply that sees them roughly in balance even after the Fed stops its buying. An end to Fed purchases would be a significant hit to demand. But it looks like the U.S. Treasury will be cutting back on bond auctions as about the same time. And that would leave demand and supply roughly where they are now.

CPI inflation climbs to 5.4% annual rate, stocks shrug

CPI inflation climbs to 5.4% annual rate, stocks shrug

The Federal Reserve has said that the current jump in inflation is temporary, a result of post-pandemic glitches in the supply chain. So far the market is going along with that view. But huge jumps in monthly inflation in May and now, this morning, June are treating that confidence.
The consumer price index (CPI) rose 0.9% in June from May and by 5.4% from June 2020, according to the Labor Department today. Excluding more volatile food and energy components, core CPI inflation rose by 4.5% from June 2020. That’s the biggest jump in core inflation since November 1991.

Today brings the selling that many expected after Wednesday’s Fed meeting

Today brings the selling that many expected after Wednesday’s Fed meeting

Yesterday, growth stocks climbed in the face of signals from the Federal Reserve on Wednesday that interest rates increase were coming sooner–as soon as the end of 2022–than expected. That seemed puzzling. May be, one line of thought (mine) had it, investors and traders decided that growth stocks would outrun any increase in interest rates that might take place in 2022 or 2023. Today, we got the selling that many had expected yesterday

CPI inflation climbs to 5.4% annual rate, stocks shrug

With Fed meeting on tap for tomorrow, stocks slip on disappointing retail sales growth

Retail sales fell by 1.3% in May from April, the Commerce Department reported this morning. Economists surveyed by Bloomberg had projected a 0.8% month over month drop. The month to month drop in retail sales was the first drop in month to month sales since February. Retail sales still grew a very solid 23% year over year as the economy continued its recovery from the pandemic recession of 2020.

Markets increasingly think Fed’s end of bond buying will be no big deal

After last week’s Treasury rally, Wall Street says short bonds again–for a short-term trade

After a quick jump in bond prices (and decline in yields) forced Treasury short-sellers to buy in order to cover their trade (and avoid further losses), today, Monday June 4, Wall Street strategists are saying that in the short-term the pendulum has swung back too far and it’s now time to go short Treasuries again ahead of Wednesday’s meeting of the Federal Reserve.