Deposit Funding Compass

The ADP employment report showed that 103,000 jobs were added in the private sector in November. This was below the consensus expectation for today’s report and also below the consensus expectation for Friday’s BLS report (headline: 187k, private: 160k). Rate markets priced for deep cuts in early 2024 may get a shock next week if…

The bond market is betting on a “dovish pivot” for the seventh time since the Fed embarked on its current tightening cycle. Treasury yields turned sharply lower as bonds rallied in the wake of last week’s FOMC meeting, at which Chair Powell hinted that the current rate-hike cycle may be near an end. Markets now…

Federal Reserve Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades after it held off on raising interest rates for a second consecutive policy meeting. Federal Open Market Committee left its benchmark rate unchanged Wednesday in a range of 5.25% to 5.5%. Officials…

With the Federal Reserve shrinking its portfolio of government securities, Treasuries experienced their worst sell off on longer terms in nearly four decades. With 10-year yields surging past 5% for the first time in 2007 this week the Fed may come under pressure, as ever-increasing borrowing costs bring with it the risk of a harder…

Treasuries tumbled, driving two-year yields to a 17-year high, after a surprisingly large jump in retail sales last month increased speculation that the Federal Reserve will raise interest rates again. Yields rose across the maturity spectrum led by the five-year, which rose as much as 17 basis points to the highest level since 2007. The…

US consumer prices advanced at a brisk pace for a second month in September, underscoring the Federal Reserve’s intent to keep interest rates higher for longer. Core consumer price index, which excludes food and energy costs, increased 0.3% last month. Economists favor the core gauge as a better indicator of underlying inflation than the overall…

Private US companies added the fewest number of jobs since the start of 2021 in September and pay growth slowed, pointing to a weakening in labor demand in several industries. Private payrolls rose 89k last month after climbing 180k in August. The rout in bond prices took a pause this morning on the heels of…

The latest surge in long-term interest rates to the highest levels in 16 years adds to a lengthening list of headwinds threatening to blow the US economy off a soft-landing course. 10-year Treasury yields are up over a percentage point since mid-May, reaching 4.56% Tuesday afternoon, the highest since October 2007. The latest leg-up in…

Applications for US unemployment benefits fell to the lowest level since January last week, indicating a healthy labor market that continues to support the economy. Bond traders are bracing for Treasury yields to keep pushing higher after the FOMC signaled it’s likely to hold interest rates at elevated levels well into next year. Two-year rates…

Core US inflation, which excludes food and energy costs, ran at a faster-than-expected monthly pace in August, leaving the door open for additional interest-rate hikes from the Federal Reserve. The advance was +0.3% from July, the first acceleration in six months. The report adds to concerns that the renewed momentum in the economy is reigniting…