My suspicion on the rate hike and news conference were on the mark–but the talking heads on CNBC did have me thinking that the FOMC had threaded the needle when their initial ‘statement’ was released–for a moment I felt some relief, but realistically I knew better.
It didn’t take long for Jay Powell to slap down the notion of a ‘pause’ in interest rate hikes and for markets to tumble hard. The tumble continues this morning with the S&P500 futures off 2/3 %. More importantly the 10 year treasury is way up at 4.19%. from a 4.06% close yesterday.
So what is ahead? Data dependent–starting tomorrow with the employment report. Then the CPI next Thursday. We need to see true softness in numbers–not have the talking heads interpret the numbers with bias toward ‘talking their book’. In the mean time rates are moving higher and I will likely give back the gains from last week. So my ‘shopping’ continues–buying the highest quality issues with current yield at 6.5% and above–many times considering YTM as there are many baby bonds and term preferred’s with YTM’s at 10% and above.