June 10, 2022 | Daily JAM |
The yield on the 10-year Treasury climbed 12 basis points today to 3.16%. The yield on the 30-year Treasury rose to 3.20% from 3.17% yesterday, June 9. The yield on the 5-year treasury reached 3.25%, up from 3.07% yesterday and above the yield on the 10-year maturity. The yield on the 2-year Treasury, which tends to be the most sensitive maturity to increases in the Federal Reserve’s short-term benchmark interest rate, climbed to 3.06% from 2.82% yesterday. In light of the 8.6% annual CPI inflation rate announced today, bond traders increased their bets on a 75 basis point interest rate hike from the Federal Reserve at both its June 15 meeting (that’s next Wednesday) and at the July 27 meeting.
June 10, 2022 | Daily JAM, Morning Briefing |
Headline Consumer Price Index inflation in May rose to a new annual high rate of 8.6% in May, the Bureau of Labor Statistics reported today, June 10. Headline prices rose 1% from April. The big drivers were, as expected, food (with prices up at a 10.1% annual rate) and energy. The core CPI, which strips out food and energy prices, rose 0.6% in May from April and at a 6% annual rate.
June 2, 2022 | Daily JAM, Morning Briefing |
The U.S. economy added 390,000 jobs in May, the Labor Department reported this morning. Economists had expected the economy to add 318.000 jobs for the month. In April the economy added a revised 436,000 jobs. The unemployment rate stayed steady at 3.6%. Economists had expected a drop to 3.5%.
June 2, 2022 | Daily JAM, Morning Briefing |
Another Federal Reserve official talked the interest rate increase talk today. Federal Reserve Vice Chair Lael Brainard told CNBC that expectations for half-percentage-point increases in interest rates this month and next were reasonable, and saw no case for pausing the central bank’s tightening campaign afterward. “From where I sit today, market pricing for 50 basis points, potentially in June and July, from the data we have in hand today, seems like a reasonable path.”
May 30, 2022 | Daily JAM, Morning Briefing |
Federal Reserve Governor Christopher Waller said today, May 30, that he wants to keep raising interest rates in half-percentage point steps until inflation is easing back toward the central bank’s goal of 2%. “I support tightening policy by another 50 basis points for several meetings,” he said. “In particular, I am not taking 50 basis-point hikes off the table until I see inflation coming down closer to our 2% target.” Waller is the first Fed official to speak on interest rate policy after last week’s rally and ahead of the quiet period that begins Saturday and runs through the Fed meeting on June 15. On Sunday I posted that the tenor of Fed comments this week would go a long way to demonstrating whether the Powell Put–the Fed’s de facto policy of propping up stocks on a decline–was still in effect or if it had been replaced by a policy of subtly encouraging orderly (of course) market retreats as an aid to fighting inflation.
May 29, 2022 | Daily JAM |
Almost everyone believes that the Federal Reserve will raise its benchmark short term interest rate by 50 basis points at its June 15 meeting. The CME FedWatch Tool put the odds of a 50 basis point increase at 93.3% on Friday. But last week saw a small, but I think significant, shift in thinking about the July 29 meeting. And I think that shift was one of the reasons for last week’s rally. So it is of some interest to traders and investors whether this shift continues into this coming week.
May 25, 2022 | Daily JAM, Morning Briefing |
Minutes from the Federal Reserve’s May 4 meeting shows central bank officials in agreement on the ned for 50-basis-point interest rate increases at the June and July meetings. And then, the minutes say, the Fed would respond to developments in the economy either with more interest rate increases or a pause to let the economy recover. That’s essentially in line with market sentiment–although Wall Street may be more convinced of the need for a September interest rate increase. That agreement was reassuring to the stock market today.
May 19, 2022 | Daily JAM, Jubak Picks, USB |
Back on April 11 when I sold Wells Fargo (WFC) and the Invesco KBW Bank ETF (KBWB) out of portfolios to reduce my exposure to a slowing economy caused by the Federal Reserve interest rate increases, I kept my position in U.S. Bancorp (USB) because I wanted to collect the dividend due to be paid out on April 15 (and because I thought super-regional U.S. Bancorp, as one of the best managed banks in the country, was less exposed to the downward trend in the sector.) Well, as of May 19, I’ve certainly collected my quarterly dividend (the stock current yields 3.75%) and the downward trend in financial stocks has picked up speed with the Fed announcing (well, as close to “announcing” as the Fed ever does) interest rate increases for the June, July and September meetings of the central bank, so I’ll be selling U.S. Bancorp out of my Jubak Picks Portfolio tomorrow May 20.
May 19, 2022 | Daily JAM, Morning Briefing |
Initial claims for unemployment moved up to 218,000 last week . That was the highest level since the week that ended on January 22. And an increase of 21,000 from the revised total of 197,000 the week before. But even though the official report is only a week old, it’s not capturing what seems to be an upward trend in the announcement of layoffs.
May 12, 2022 | Daily JAM |
But did he have to say it? The financial market would prefer not to think about inflation all the time. The markets are indeed pretty good at ignoring the inconvenient. But this morning Federal Reserve Bank of St. Louis President James Bullard said out loud what Wall Street knows in its heart but doesn’t want to think about. “Inflation is broader and more persistent than many have thought and the Fed will have to act in order to keep inflation under control and we’ve got a plan in place,” Bullard told Yahoo Finance Wednesday.
May 5, 2022 | AMD, AMZN, Daily JAM, Videos |
My one-hundredth-and-thirtieth YouTube video “Market gives Fed a razzberry” went up today. Yesterday, the Fed announced that it would raise rates by 50 basis points but that it was not looking to raise by 75 at the June or July meetings. In response, the market had a huge rally, especially in tech stocks, as it had b been widely assumed that those meetings would see the larger 75 basis-point increase. All that has changed today, when upon second thought the market no longer likes this news, with the S&P 500 and NASDAQ Composite giving back all the gains they made yesterday plus a little more. I look at a few specific stocks, like Amazon and Advanced Micro Devices, and talk about why I think the selloff in tech stocks is going to continue.
May 4, 2022 | Daily JAM, Morning Briefing |
Today the Federal Reserve’s Open Market Committee announced that the central bank would raise its benchmark interest rate by 50 basis points. Stocks rallied strongly after Federal Reserve chair seemed to take off the table the 75 basis point increase in June and July that financial markets were convinced was in the cards.
