The week was marked with much stronger than expected macro headlines across the board, with the latest ISM reading indicating manufacturing expansion for the first time since 2022, March Nonfarm Payrolls figures once again blowing out consensus, and the price of oil breaking $90/barrel for the first time since October. While a variety of data points under the hood suggested the health of this growth may be lacking, these updates – along with recent prints pointing to stubbornly high inflationary pressures – severely complicate the optics of the long-awaited Fed rate cuts that the market has been anticipating and seemed to take as a given just a few weeks ago. Right on cue, Jerome Powell and various Fed governors took to the financial airwaves throughout the week to jawbone down expectations for near-term easing in response to these macro updates. However, exploding federal deficits – despite unemployment <4% and the country experiencing a period of at least nominal peacetime – and a federal interest burden that appears to be going parabolic make sustained high rates on government debt (or even worse, further rate hikes floated by some Fed officials this week) seem like a virtual non-starter for the central bank, particularly given higher rates increasingly look
Ten31 Timestamp 837,980
Ten31 Timestamp 837,980
Ten31 Timestamp 837,980
The week was marked with much stronger than expected macro headlines across the board, with the latest ISM reading indicating manufacturing expansion for the first time since 2022, March Nonfarm Payrolls figures once again blowing out consensus, and the price of oil breaking $90/barrel for the first time since October. While a variety of data points under the hood suggested the health of this growth may be lacking, these updates – along with recent prints pointing to stubbornly high inflationary pressures – severely complicate the optics of the long-awaited Fed rate cuts that the market has been anticipating and seemed to take as a given just a few weeks ago. Right on cue, Jerome Powell and various Fed governors took to the financial airwaves throughout the week to jawbone down expectations for near-term easing in response to these macro updates. However, exploding federal deficits – despite unemployment <4% and the country experiencing a period of at least nominal peacetime – and a federal interest burden that appears to be going parabolic make sustained high rates on government debt (or even worse, further rate hikes floated by some Fed officials this week) seem like a virtual non-starter for the central bank, particularly given higher rates increasingly look