2024-05-06 07:30:00 ET
Summary
- Interest rates are unchanged over the last six months. The recent rise in rates that has had markets in an uproar the last few weeks appears to have run its course.
- While the 10 year Treasury yield is still in a short-term uptrend, the technical pattern is not that favorable.
- I am starting to see more weakness in the economy recently but not anything that I’d call recessionary yet.
Coming into last week’s FOMC meeting, Jerome Powell was expected to be hawkish. I know that because numerous articles in the financial press told me so, which makes me wonder if the articles themselves affected those expectations. Maybe. Bloomberg is now producing a Fed Sentiment index that is powered by a natural language processing algorithm trained on more than 60,000 headlines about the Fed. That index shows that Powell’s statements after the December FOMC meeting were perceived as a major dovish shift in Fed rhetoric. That shift, according to Bloomberg, “gave stocks and bonds a boost and helped the economy dodge a downturn”, a conclusion based on some pretty flimsy evidence if you ask me. If you assume the economy was headed for a slowdown, and it didn’t then I guess you could also assume that Powell’s language change in December is the reason. The fact that economists have been “expecting” a downturn for the last two years and have been dead wrong might point you in a different direction, but I guess Bloomberg needs to recoup their investment in AI....
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Weekly market Pulse: What Did Powell Say?