Chair Powell stated that the US central bank is not rushing to cut rates in light of strong labor market and inflation data.

Chair Jerome Powell: – The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence.

  • The market is now pricing only 40 bps of rate reductions this year.

 

 

  • It’s striking how much the markets have adjusted their expectations for the Fed funds rate trajectory compared to a month ago.

 

 

  • Treasury yields climbed further.

 

 

  • Goldman expects the Fed to deliver its first rate cut in July.
  • Fed officials continue to signal delays in rate cuts.

 

Source: @economics   Read full article

 

Source: @economics   Read full article

 

  • Rate cut expectations for 2024 dipped below 40 bps.

 

 

US Economy

 

  • Inflation expectations moved higher as gasoline prices increased.
  • Inflation remains sticky.

 

 

  • The latest US upside inflation surprise stands out among advanced economies.

 

 

  • An increasing percentage of Americans are making only the minimum payment on their credit card debt.

 

 

  • . Retail sales surged last month, topping expectations.

 

 

  • Here are the March changes in retail sales by sector.

 

 

  • The Atlanta Fed’s GDPNow estimate for Q1 GDP growth jumped after the retail sales surprise.

 

 

  • Mortgage rates continue to climb.

 

 

  • Mortgage applications remain well below last year’s levels.

 

 

  • Delinquencies on FHA loans due to unemployment are increasing.

 

 

  • The IMF’s projections for growth five years out have been trending lower.

 

 

Market Data

 

  • The US increasingly relies on immigrants to grow its labor force.

 

 

  • Unemployment rates by state:

 

 

  • Fund managers have been boosting their allocations to commodities.

 

 

  • Market breadth has deteriorated rapidly …

 

 

  • Fund managers have been increasingly bullish on equities, …

 

Source: BofA Global Research

  • … with cash levels sinking.

 

 

  • More firms have been issuing negative guidance.

 

 

  • The S&P 500 is almost 2% below its 50-day moving average.

 

 

  • Let’s take a look at the market drawdowns in the current selloff.
    • Sectors:

 

  • Equity factors/styles:

 

 

Great Quotes

 

“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired and success achieved.” – Helen Keller

 

Picture of the Week

 

Baby Black bear in Shenandoah National Park, VA

 

 

 

All content is the opinion of Brian Decker