US economic data remains weak, Powell may take aggressive measures again👆

US data was much less friendly to the goldilocks narrative today, as a sharp -5.2% drop in durable goods orders was offset against stronger than expected initial claims (230k vs 240k last week), with bond yields rising around 3bp on the day despite the rough showing in equities today. Furthermore, Atlanta Fed's GDPNow was revised up even further to 5.9% for Q3, adding further hawkish pressures to Powell's Jackson Hole speech today, where he will be delivering a keynote on the topic of "Structural Shifts in the Global Economy". Both nominal and real (inflation adjusted) yields are going into the symposium at 90%-percentile highs going back to 2004. Last year's keynote was surprisingly brief, with Powell brutally explicit in trying to usher rates higher, leading to the infamous Q4 risk sell-off. Will the US economy still in decent shape, and inflation and labour markets only showing limited signs of softening despite rates at >5%, will the Chairman be looking for another Round 2 knock-out? Stay tuned!

#US #Powell #GDPNow #JacksonHole #rate

US economy surges, FOMC minutes give hawkish signals!😮

In US markets, signs of a stronger-than-expected economy continued to simmer, with housing starts surging 3.9% MoM, industrial production adding 1% MoM, and the Atlanta Fed GDPnowcast being revised up further to a sizzling 5.8% (due to friendly seasonal adjustments), significantly above Wall Street estimates. All of this stronger economic news continues to pressure US fixed income, with 10yr yields resuming their relentless march higher, and about to break the last October highs. To make matters worse, the July FOMC minutes carried a hawkish bent, with headlines such as: Most Fed officials saw 'significant' upside risks to inflation Inflation risks could require further tightening Officials saw high uncertainty around policy lags

#USEconomy #FOMC #GDPNow #Fed #market

Fed's Policy, Treasury Yields, and Inflation in the Spotlight 🌏
Post retail sales, Atlanta Fed's GDP Now was revised up to 5.4%, and 2yr yields spiked above the May 21 highs as we approached 5.20%. Stop-outs were seen in long fixed income across the board, with treasury yields jumping +15bp across the curve (5th consecutive days of >10bp moves). Fed's Barkin added fuel to fire as he broke (dovish) ranks by stating that the Fed is "walking fine-line on over- and under-correction" in policy, and he needs to see further "convincing demand weakness feeding into inflation", and while he favors rates on hold for now, the Fed is "not there yet" in terms of tackling inflation. Rate hikes odds jumped back to 36% in December, with even a small bump in the Jan 2024 meeting odds to just over 10% on the back of the strong data. Powell's speech tomorrow at the Economic Club of NY will carry just that much more importance now, as it'll be one of the last official speeches before the communications blackout.
#GDPNow #Fed_policy #rate_hikes #December_odds #Powell_speech

As economic data shows weakness, the market is lowering expectations of interest rate hikes🥺

With the dataset suddenly downshifting, and standing at-odds with the Atlanta Fed's GDPNow still calling for 5.8%+ GDP, rates markets had a bit of reckoning as 2yr yield craters 16bp and the 2/10s yield curve bull-steepeneed by 7bp. November hiking odds dropped from a high of 47% down to lower 30%, as sell-side banks reported a wrath of short-covering flows throughout the whole day, culimating with a massive squeeze into the 7yr bond auction which came -2bp through the screens at 4.212%, with $95.9bln in bids for a strong 2.66x bid to cover ratio, the strongest since January.

#Economic #interestrates #GDPNow #curve #bond