AFMC - Market Pulse: Skeptically Optimistic

2024-02-06 00:20:00 ET

Summary

• Bond yields didn't move all that much but what move there was, was down.
• People sold stocks and bought bonds because the odds of a rate cut in March fell during the press conference.
• The Fed doesn't know if inflation has peaked or whether this is just a lull before another wave higher.

The 10-year Treasury Note yield fell 13 basis points last week, a move that would not normally rate any mention whatsoever, but the path of that small decline does. From Monday to Thursday, the yield fell, from high to low, by 34 basis points, a move that added 1.3% to bond prices (Aggregate bond index) in four days. In a world where it takes a year to accumulate roughly 4% interest, that kind of move is significant. From Thursday's low of 3.82%, the yield rose to 4.05% by Friday afternoon and closed at 4.03, a 21 basis point move in one day. The question is why? Why did we see such volatility in the bond market last week?...

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