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Bear Steepening Aftermath of FOMC

US TSYS

Tsys trading weaker day after FOMC delivered a widely expected second consecutive 75bp rate hike, yield curves bear steepening with short end outperforming after the Fed scales back hawkish forward guidance.

  • Fed remains in blackout through today, but markets still pouring through Chairman Powell's statements including the "stance of monetary policy tightens further, it'll become appropriate to slow the pace of increases while we assess how cumulative policy adjustments are affecting the economy and inflation." Chances of third 75bp hike in Sep have eased in favor of 50bp.
  • "I don't think the U.S. is currently in a recession," Powell said w/ GDP that could show two quarters of negative growth this morning. There are "areas of the economy that are performing too well and of course, I'd point to the labor market. In particular. It's true that growth is slowing for reasons we understand."
  • Economic data on tap at 0830ET (prior, est): Initial Jobless Claims (251k, 250k), Continuing Claims (1.384m, 1.386m), Personal Consumption (1.8%, 1.2%), GDP Price Index (8.2%, 8.0%), GDP Annualized QoQ (-1.6%, 0.4%), Core PCE QoQ (5.2%, 4.4%). KC Fed mfg index (12, 3) up at 1000ET.
  • US Treasury supply: $55B 4W, $50B 8W bill auctions at 1130ET followed by $38B 7Y note auction (91282CFC0) at 1300ET.
  • Equities mildly weaker (ESU2 -12.50 at 4012.00) into another heavy slate of earnings releases. Meta missed late Wednesday ($2.46 vs. $2.541 est) while Ford beat ($0.68 vs. $0.447 est).
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Tsys trading weaker day after FOMC delivered a widely expected second consecutive 75bp rate hike, yield curves bear steepening with short end outperforming after the Fed scales back hawkish forward guidance.

  • Fed remains in blackout through today, but markets still pouring through Chairman Powell's statements including the "stance of monetary policy tightens further, it'll become appropriate to slow the pace of increases while we assess how cumulative policy adjustments are affecting the economy and inflation." Chances of third 75bp hike in Sep have eased in favor of 50bp.
  • "I don't think the U.S. is currently in a recession," Powell said w/ GDP that could show two quarters of negative growth this morning. There are "areas of the economy that are performing too well and of course, I'd point to the labor market. In particular. It's true that growth is slowing for reasons we understand."
  • Economic data on tap at 0830ET (prior, est): Initial Jobless Claims (251k, 250k), Continuing Claims (1.384m, 1.386m), Personal Consumption (1.8%, 1.2%), GDP Price Index (8.2%, 8.0%), GDP Annualized QoQ (-1.6%, 0.4%), Core PCE QoQ (5.2%, 4.4%). KC Fed mfg index (12, 3) up at 1000ET.
  • US Treasury supply: $55B 4W, $50B 8W bill auctions at 1130ET followed by $38B 7Y note auction (91282CFC0) at 1300ET.
  • Equities mildly weaker (ESU2 -12.50 at 4012.00) into another heavy slate of earnings releases. Meta missed late Wednesday ($2.46 vs. $2.541 est) while Ford beat ($0.68 vs. $0.447 est).