Fed raises interest rates by 0.75%, bringing the Fed Funds Rate range to 2.25-2.50%. The FOMC is projecting 4 additional hikes this year, taking the year-end range to 3.25-3.50%. The market is aligned with the Fed, pricing in a year-end range of 3.25%-3.50%. At its meeting today the FOMC voted unanimously to raise the Federal […]

Job gains top estimates, unemployment rate holds at 3.6%.  S. employers added more jobs than expected in June and the unemployment rate held near a fifty-year low, suggesting that for the time being, hiring needs are defying concerns about the economic outlook.  Wage growth (while still elevated) moderated slightly for a second month in a […]

Job gains top estimates, unemployment rate holds at 3.6%.  S. employers added more jobs than expected in May and wage growth (while still elevated) moderated slightly.  A sustained softening in wage growth would be welcome by the Fed as it endeavors to tamp down the highest inflation levels observed in 40 years.  The central bank […]

Today, the S&P 500 officially entered a bear market closing down more than 20% from the peak on January 3.  Year-to-date, 2022 has been difficult for investors, offering limited opportunities for positive returns.  In this update, we offer historical perspective on the bear market experience, highlight issues likely to shape the path forward (for better […]

U.S. inflation unexpectedly accelerated to hit a new 40-year high in May.  Record gasoline prices and geopolitical factors threaten to keep inflation high in the coming months suggesting the Fed – which has already committed to half-point rate increases at each of its next two meetings (starting next week) – will need to apply more […]

April retail sales up 8.2% year-over-year; basically flat after inflation.  In spite of elevated inflation, consumers continued to spend at a robust pace in April.  Increased spending on gasoline (+37% YoY) accounted for a large portion of the nominal increase, but strength was also evident in food services and drinking places (+19.8%), brick and mortar […]

U.S. Consumer prices rose more than forecast in April, indicating that elevated levels of inflation could persist longer than expected and keeping the Federal Reserve on an aggressive path of monetary tightening.  The report did show a slight moderation in price increases, but a 0.6% month-over-month increase in core consumer prices (excluding food and energy) […]

Labor market momentum continues; highlights underlying economic strength.  S. employment continued to increase at a robust pace in April and wage growth (while still elevated) moderated slightly.  A sustained softening in wage growth would be welcome by the Fed as it endeavors to tamp down the highest inflation levels observed in 40 years.  The central […]

Fed Statement Side-by-Side: https://file.ac/QLp-SuA66f8/ Fed raises interest rates by 0.50%, bringing the Fed Funds Rate range to 0.75-1.00%. The market is pricing in a year-end range of 2.75%-3.00%. At its meeting today the FOMC voted unanimously to raise the Federal Funds rate to 0.75-1.00%. We also received clarity on the pace of quantitative tightening. Beginning […]

1.4% GDP contraction. U.S. GDP contracted at an annualized pace of 1.4% in the first quarter compared to analyst expectations for 1.0% growth and decelerating from +6.9% in the fourth quarter. On its face, the headline number is decidedly soft, but underlying details show still-solid household demand and business investment, which aligns with the commentary […]

March retail sales up 6.9% (nominal) and down 1.6% (real) year-over-year.  Increased spending on gasoline (+37% YoY) accounted for more than a third of the nominal increase as several more discretionary-oriented categories slowed or declined.  It is important to note that we are entering a period of extremely difficult prior-year comparisons.  Retail sales grew by […]

Consumer prices rose 8.5% in March marking a fresh 40-year high and bolstering expectations that the Fed will raise interest rates by 0.50% in May.  Many observers believe today’s CPI reading could mark the peak, capturing rising energy and food costs following Russia’s invasion of Ukraine.  Additionally, we have now annualized the last of easier […]

Payroll additions are strong, but miss elevated expectations.  U.S. job growth momentum continued in March and previous reports were revised higher. Yields moved higher after the release, indicating that bond market investors believe this report provides ample justification for the Fed to continue hiking rates. At its March meeting, the median FOMC projection was for […]

FOMC Statement Side by Side Fed raises interest rates for first time since 2018 and signals intentions for 6 more hikes in 2022. At its meeting today the FOMC voted to raise the Federal Funds rate to 0.25%-0.50%. Bullard dissented, preferring a rate of 0.50-0.75%. The statement noted that the Fed will begin reducing its […]

February retail sales up 17.6% (nominal) and 9.7% (real) year-over-year.  Primary drivers of the year-over-year increase include spending on gasoline (+36.4%), restaurant dining (+33.0%) and apparel (+30.6%).  Despite sustained strength in real retail sales growth, heightened inflationary pressures exacerbated by the Russia/Ukraine conflict are posing a threat to consumer demand and therefore economic growth.  In […]

Consumer prices are 7.9% higher than they were a year ago – in line with forecasts and marking a fresh 40-year high.  This data suggests inflation woes were intensifying even before Russia’s Ukraine invasion sparked a dramatic increase in commodity prices.  Most economists were expecting February to mark the peak of YoY price increases, with […]

Payroll additions surprise positively again. U.S. job growth boomed in February while wage growth slowed, highlighting a steadily improving, though extremely tight labor market that should keep the Fed on track for a rate increase later this month. Whereas some observers had seen potential for more than one 0.25% increase in March, economic uncertainties posed […]

January retail sales up 3.8% month-over-month (+3.2% adjusted for inflation); topping forecasts.  Retail spending increased 3.8% in January – marking the highest increase since March following a 2.5% decline in December.  Demand for goods remains robust despite elevated inflation levels, while the omicron variant and related surge in Covid-19 cases likely dampened services spending in […]

Consumer prices are 7.5% higher than they were a year ago – slightly higher than forecast and the highest level reported in nearly 40 years.  The writing was already on the wall, but when you couple these persistent elevated levels of inflation with the labor market strength we discussed last week, it leaves absolutely no […]

Payroll additions surprise positively – Highlighting labor market strength and emboldening Fed plans.  S. job growth exceeded all forecasts and defied Omicron headwinds in January.  Following its meeting last week, the FED noted the impact of the Omicron variant on COVID-sensitive sectors like travel, but predicted a short wave of infection and, as a result, […]

December retail sales declined 1.9% month-over-month (-2.4% adjusted for inflation); missing forecasts. Retail spending declined 1.9% in December, following a 0.2% gain in November, suggesting that elevated inflation levels are beginning to weigh on consumers. December data showed softer spending at furniture, electronics, and sporting goods stores and a more meaningful dip in online spending […]

Consumer prices rose at the fastest annual pace in nearly 40 years last month, setting the stage for the start of Federal Reserve interest rate increases as soon as March – a dramatic shift from the policy timelines projected as recently as a few months ago.    Looking forward, we believe normalizing demand, tighter policy, and […]

Payroll additions disappoint again; Lower unemployment provides underpinning for tighter Fed policy. U.S. job growth slowed to its lowest level in 2021, while participation was unchanged and unemployment marked a fresh post-pandemic best. Today’s report is an indication that in spite of robust demand for workers, the issues that have limited hiring (retirements, childcare issues, […]

Fed moves to less accommodation, consistent with investors’ expectations.At its meeting today the FOMC voted unanimously to maintain the Federal Funds rate at 0-0.25% and to increase the pace of tapering. In its summary of economic projections, the Fed updated their projections to show slightly slower GDP growth, a lower unemployment rate, and slightly faster […]

November retail sales rose 0.3% month-over-month (-0.5% adjusted for inflation); missing forecasts. Retail spending increased 0.3% in November, following an upwardly revised 1.8% increase in October. In recent communications, we highlighted expectations for month-over-month figures to continue to be a bit noisy (+/-1%) despite spending levels that remain decidedly robust in absolute terms. November data […]

Consumer prices rose at the fastest annual pace in nearly 40 years last month, increasing pressure on the Federal reserve to tighten monetary policy sooner rather than later.  We believe there is a high likelihood that November readings mark peak inflation levels for this cycle.  Increasingly tough comps and tighter policy should cause the rate […]

Payroll additions miss by a margin; Unemployment drops significantly?  U.S. job growth slowed to its lowest level in 2021, while participation ticked higher and unemployment marked a fresh post-pandemic best.  We can only assume that seasonal adjustments* played a role in the mixed message we find in today’s jobs report.  Looking ahead to the December […]

October retail sales rose 1.7% month-over-month (+0.8% adjusted for inflation); topping forecasts.  Retail spending increased 1.7% in October, the most since March, following an upwardly revised 0.8% increase in September.  Broad-based increases are an indication that consumer demand remains robust despite higher prices.   It appears that elevated savings and rising wages are supporting continued merchandise […]

Consumer prices (CPI) increased 6.2% year-over-year, higher than forecast, and marking the highest level since 1990.  In October, the consumer price index (CPI) increased 6.2% compared to the same period a year ago.  Expectations ranged from 5.4% to 6.0% with a median of 5.9%.  Core CPI (excludes food and energy) increased at 4.6% year-over-year.  The […]

Payroll additions and unemployment rate both better than expected in October.  The U.S. labor market showed promise in October with higher-than-forecast and broad-based payroll gains indicating stronger progress filling millions of open positions.  Last month, we highlighted our view that school re-openings and expiry of expanded unemployment benefits should support more hiring into year-end especially […]