February 5, 2024 Headlines

Hawkish comments from Fed Chair Powell are feeding a continuation of Friday’s post-jobs selloff in Treasuries.

In an interview with 60 Minutes, Powell expressed concerns that moving too soon with rate cuts could ultimately cause more trouble for the U.S. economy. Not necessarily a revelation, but rather further evidence that Fed leaders aren’t as dovish as markets had been pricing. As discussed previously, the recent declines in inflation have been fueled to a large degree by declines in categories that tend to be more volatile on a periodic basis. In other words, there’s greater risk that those components reverse course in the coming months, which Powell alluded to in the interview. “The danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading,” said Powell.

This week’s economic calendar is very light, barely filling half a page on Bloomberg. PMI data for the services sector will be released later this morning, and the only other consequential release for the week will be initial jobless claims on Thursday. There will be several Fed leaders speaking this week, including Goolsbee (Chicago Fed) and Bostic (Atlanta Fed) today.

Jason Haley
Chief Investment Officer