Grab your favorite ice cream (not the rocky road variety), and let’s chat about the tumultuous ride in the world of bonds. Spoiler alert: it’s not as delicious as that chocolaty, marshmallowy treat.
Fed’s Rumble and Tumble
Last night, bonds faced a large sell-off as the echoes of the Fed’s statements reverberated through the markets. The word on the street? Another rate hike is looming. Now, call me old-fashioned, but I think the Fed has pushed the pedal to the metal, raising the overnight lending rate by a whopping 5.25% in the last 18 months. That kind of shift can’t magically ripple through the economy yet.
But here’s the kicker—I’ve got my eyes on the canaries in the coal mine, aka the trucking companies. When these guys start tapping the brakes, it’s a signal that fewer goods are hitting the road because, well, fewer things are being ordered. Cue the economic slowdown.
Market Watch: Economic Data Extravaganza
Hold on to your calculators, folks! This week is a data extravaganza, culminating in the BLS Jobs Report on Friday. If we catch a break on the inflation front, we might just be able to stop the bleeding and capitulation in bond trading. Remember that “higher for longer” bombshell the Fed dropped a few weeks ago? Spooky stuff, especially since their crystal ball tends to be a bit cloudy. Case in point: two years ago, they were singing the “transitory inflation” anthem while we were all feeling the pinch.
Surprise, Surprise: Jolts in the Numbers
This morning, the Jolts number hit the scene, and oh boy, it was a surprise package. Job openings, the lifeblood of economic vitality, jumped to a whopping 9.6 million when the forecast was a more modest 8.8 million. More job openings might sound like good news but hold your horses. It could mean companies may be digging deeper into their pockets to attract talent, and that spells more inflation trouble. The mortgage rates, sadly, are setting new 23-year highs today.
Tomorrow’s Tease: ISM Non-Manufacturing PMI
Set your alarms because tomorrow morning, we’ve got the Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) hitting the stage at 9 AM. Why is this important? It’s where the consumer money dance is happening—weddings, vacations, and all the fun stuff. If this number slows down for a few more months, I’m placing my bets on a downward trend in inflation in the following months.
The Wheel Keeps Turning
And so, my friends, the wheel of financial craziness keeps on turning. Fear not, for I shall be your trusty guide through this storm. Whether it’s deciphering economic indicators or helping you navigate the mortgage maze, I’m here for you.
Stay tuned for more updates because in the world of finance, the only constant is change.
Published 10/3/2023
