We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Pre-market indexes are back in flux, following last week’s Fed decision to raise interest rates buoying markets on the news, but a week away from new monthly employment data. Markets gave back some of last week’s gains yesterday, but are back in the green this morning, led by the Dow +170 points, the Nasdaq +25 and the S&P 500 +15 points.
Fed Chair Jay Powell appeared yesterday to address inflation in the economy, and what the Fed plans to do about it. Powell, now into his second four-year term, has gained valuable experience in how to project Fed moves in the future with benign-sounding statements that may signal the Fed’s next move: yesterday, the Chairman said “50 basis points is on the table” for the next Fed meeting, in early May. This should assuage at least some inflation hawks while not sounding alarm bells for the doves.
Part of the resistance with amping up rates too far too fast — although 50 bps, or even 1%, is hard to argue interests rates going “too far” — is inverting the yield curve between 2-year bonds and 10-years. But it’s fairly evident a near-term inversion may be in the cards anyway: the 10-year, still growing at 2.34%, only has a 14 bps gap between the 2-year. Anything tighter than 25 basis points between the two makes market participants take notice. An inverted yield curve can mean — but not always means — an economic recession is in our future.
That said, with inflation keeping more stubbornly high than Powell had initially figured, ratcheting up interest rates — in addition to letting assets expire on the Fed’s $9 trillion balance sheet — it may take a half-point hike to amount to more than a drop in the bucket. Goldman Sachs (GS - Free Report) is already calling for two 50 bps hikes this year. In other words: yield-curve inversion be damned, we need to cool inflation. We’ve already seen near-8% CPI, and chances are we have yet to see the top.
Finally, Nike (NKE - Free Report) shares are up more than +5% this morning on its better-than-expected fiscal Q3 earnings report Monday after the closing bell. The company says demand is outpacing supply — and it did acknowledge supply-chain issues in the quarter — so the outlook for the world’s largest shoe company is fairly rosy, as well.
Image: Shutterstock
Markets Fill in Gaps from Monday's Losses
Tuesday, March 22, 2022
Pre-market indexes are back in flux, following last week’s Fed decision to raise interest rates buoying markets on the news, but a week away from new monthly employment data. Markets gave back some of last week’s gains yesterday, but are back in the green this morning, led by the Dow +170 points, the Nasdaq +25 and the S&P 500 +15 points.
Fed Chair Jay Powell appeared yesterday to address inflation in the economy, and what the Fed plans to do about it. Powell, now into his second four-year term, has gained valuable experience in how to project Fed moves in the future with benign-sounding statements that may signal the Fed’s next move: yesterday, the Chairman said “50 basis points is on the table” for the next Fed meeting, in early May. This should assuage at least some inflation hawks while not sounding alarm bells for the doves.
Part of the resistance with amping up rates too far too fast — although 50 bps, or even 1%, is hard to argue interests rates going “too far” — is inverting the yield curve between 2-year bonds and 10-years. But it’s fairly evident a near-term inversion may be in the cards anyway: the 10-year, still growing at 2.34%, only has a 14 bps gap between the 2-year. Anything tighter than 25 basis points between the two makes market participants take notice. An inverted yield curve can mean — but not always means — an economic recession is in our future.
That said, with inflation keeping more stubbornly high than Powell had initially figured, ratcheting up interest rates — in addition to letting assets expire on the Fed’s $9 trillion balance sheet — it may take a half-point hike to amount to more than a drop in the bucket. Goldman Sachs (GS - Free Report) is already calling for two 50 bps hikes this year. In other words: yield-curve inversion be damned, we need to cool inflation. We’ve already seen near-8% CPI, and chances are we have yet to see the top.
Finally, Nike (NKE - Free Report) shares are up more than +5% this morning on its better-than-expected fiscal Q3 earnings report Monday after the closing bell. The company says demand is outpacing supply — and it did acknowledge supply-chain issues in the quarter — so the outlook for the world’s largest shoe company is fairly rosy, as well.
Questions or comments about this article and/or its author? Click here>>