Friday, September 22, 2023 |
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MANAGING DIRECTOR: |
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US Treasury Market |
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| Date | 1 mo | 3 mo | 6 mo | 1 yr | 2 yr | 3 yr | 5 yr | 7 yr | 10 yr | 20 yr | 30 yr |
| 09/15/23 | 5.37 | 5.46 | 5.51 | 5.43 | 5.04 | 4.72 | 4.47 | 4.42 | 4.33 | 4.60 | 4.42 |
| 09/18/23 | 5.40 | 5.46 | 5.52 | 5.43 | 5.06 | 4.73 | 4.45 | 4.40 | 4.30 | 4.57 | 4.39 |
| 09/19/23 | 5.39 | 5.45 | 5.51 | 5.45 | 5.09 | 4.78 | 4.51 | 4.46 | 4.36 | 4.61 | 4.43 |
| 09/20/23 | 5.39 | 5.48 | 5.53 | 5.48 | 5.18 | 4.86 | 4.59 | 4.52 | 4.41 | 4.64 | 4.45 |
| 09/21/23 | 5.38 | 5.48 | 5.54 | 5.46 | 5.14 | 4.85 | 4.62 | 4.58 | 4.49 | 4.77 | 4.57 |
The data in the table above is static as of the time it was pulled, so rates may have changed. Treat all data in this table and PMR as indications only and availability is always subject to change. This information was pulled manually from sources we believe to be reliable. New source, as of 12/12/2022, Bloomberg, L.L.P. As of: close of business 09/21/2023
DO YOU TRUST THE DOTS?
As expected, the FOMC’s September meeting resulted in an unchanged 5.25% - 5.50% target fed funds range, but the “dot plot” indicated a more hawkish outlook of one more rate hike this year and the expectation that rates will stay higher for longer. As a reminder, as many as 19 participants (the seven governors on the Fed Board and the presidents of the twelve regional banks) each assign a dot for what they expect the fed funds rate range will be at the end of each of the next three years and beyond. This highly scrutinized chart is only provided quarterly and can offer important clues surrounding the degree of consensus or dissension within the committee.
While this month’s vote was unanimous to hold rates steady at 5.25%-5.50%, twelve of the 19 participants are signaling one more hike in November or December of this year. Notably, the forecasts for 2024 and 2025 were revised up to 5.1% (vs. 4.6% prior) and 3.9% (vs. 3.4% prior), respectively. Chair Powell continues to stress that a soft landing is the primary objective and his committee members are implying that they believe it can happen.
But while their “data dependency” may point to that, there are a multitude of headwinds looming that could wreck that plan. Just to name a few: the UAW strikes, a potential government shutdown, the resumption of student loan repayments, rising oil prices, the hemorrhaging commercial real estate market, US Corporate bond defaults tripling since 2021, geopolitical unrest, consumption expenditures cratering as pandemic money has all been spent … shall we go on? An analysis by the Chief U.S. Economist for Bloomberg Economics shows that “since the early 1980s, consensus predictions that the US economy would achieve a soft landing have peaked right before the economy started to sour.”
Makes it a little tough to trust the dots.
While this month’s vote was unanimous to hold rates steady at 5.25%-5.50%, twelve of the 19 participants are signaling one more hike in November or December of this year. Notably, the forecasts for 2024 and 2025 were revised up to 5.1% (vs. 4.6% prior) and 3.9% (vs. 3.4% prior), respectively. Chair Powell continues to stress that a soft landing is the primary objective and his committee members are implying that they believe it can happen.
But while their “data dependency” may point to that, there are a multitude of headwinds looming that could wreck that plan. Just to name a few: the UAW strikes, a potential government shutdown, the resumption of student loan repayments, rising oil prices, the hemorrhaging commercial real estate market, US Corporate bond defaults tripling since 2021, geopolitical unrest, consumption expenditures cratering as pandemic money has all been spent … shall we go on? An analysis by the Chief U.S. Economist for Bloomberg Economics shows that “since the early 1980s, consensus predictions that the US economy would achieve a soft landing have peaked right before the economy started to sour.”
Makes it a little tough to trust the dots.
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