June 20, 2024
Inflation numbers came out yesterday which showed a very slight reduction in overall inflation. The Fed liked it but wants more before it will consider a reduction in interest rates. Recently there were three cuts expected this year, but the Fed now says maaaybe one. The economy seems to be doing okay and living with the “high” rates. Yet, it seems the news is showing more layoffs. It’s a weird time with everyone waiting for something to happen. Hopefully the oft repeated soft landing will occur but we won’t know until its in the rear view mirror. In the meantime, today’s rates are going to stick around for a while.
The bond market has been pretty stable although the longer end has seen about a 25 bps reduction over the past month with the ten year moving from 4.48% to 4.24%. Short term bills have remained around 5.50% since the beginning of the year. With the drop in longer rates and shorter rates static the inversion (2 month-10 year) is now to 123 bps.
The dollar has been getting stronger against most other major currencies over the past 90 days.