Weekly rates

Recent Updates:

Capital Markets Comment: Last week's PPI and CPI readings came in showing inflation a little cooler than what the market expected, easing the steady upward climb in longer term rates. PPI excluding food and energy showed a 3.5% reading while the market expected 3.8%. The CPI excluding food and energy followed next day with a 3.2% versus 3.3% expectation. Current UST10 stands at 4.56%, with investors currently pricing in a 30% chance of a 25bps rate cut by March, nearly a 50% chance by May. Bond markets continue to assess assumptions about tariffs, trade policies, tax cuts, and immigration policies. Our own view is that inflation will remain higher than the Fed's 2% target for some time to come. Our beginning of the year benchmarks: UST10 at 4.57%, unemployment at 4.2% with a participation rate of 62.5%. Inflation, as measured by Core PCE Price Index is at 2.7%, and our Fiscal Year 2024 Federal Deficit stands at $1.83 trillion, or -7.1% of GDP (aka our Budget Balance). Such deficit is surpassed only by Brazil at -7.5%.
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