Well the 10 year treasury yield is up 3-4 basis points this morning after rising 8 basis points yesterday to be back knocking on the door of 4% (actually now at 3.98%). No real news driving rates back higher–just as there was no real news moving rates lower. Economic news has been relatively neutral–somewhat Goldilocks. Really we need further economic data to move rates lower – pricing in 6 interest rates cuts from the Fed is slightly silly at this point in time – this is from all the folks who had us in a recession by now. We need more real data!
This week we have the big number, economically speaking, on Friday with the employment report. I believe that Fed Chair Powell wanted to see unemployment increase–that was an important signal to him that higher interest rates were ‘doing the job’, but now I think he has accepted that it may not be necessary to see the unemployment rate increase, but certainly he would like to see job growth slow. While the big number is Friday, today we have the job openings and turnover report (JOLTS) which would help signal the future employment direction. It is forecast that there will be 8.8 million job openings versus 8.7 million last month–a better number in my mind would be 8.6 million, but who knows? We also have minutes from the Fed’s December meeting today at 1 p.m. (central) today–which could move markets–we’ll see.
Yesterday was a good day for our accounts as lots of dividends and interest payments hit over the weekend and yesterday–accounts are at new record highs. Honestly without the ‘help’ of dividend and interest payments I would expect to see some modest setbacks in account balances. Yesterday I did nothing – actually I was ‘locked out’ of my computer while visiting relatives in northern Minnesota–so irritating. I can do emails on my phone–that’s it. I had composed and scheduled the Tuesday Morning Kickoff before traveling, but once my laptop went dead I was ‘out of business’ since I failed to take my password book with me.
Equity futures are slightly soft this morning – moving in an inverse manner to interest rates-just like one might expect. It could be an interesting day (and week) in equities–do investors temper their thoughts on Fed interest rates cuts serving to push the 10 year treasury yield back over 4%? Markets have risen on the euphoria of cuts – does it tumble hard on reduced expectations?