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“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.” – John Kenneth Galbraith
After yesterday’s FOMC rate decision and Powell press conference, investors appeared to be comfortable with the Fed’s plan going forward. That sent treasury yields lower and equity futures higher. After sleeping on it, though, investors are having second thoughts. This morning equity futures are in the red with the Nasdaq especially feeling the pain, and Treasury yields are surging. In fact, Nasdaq 100 futures are currently well over 1% lower and threatening to take out their lows from Wednesday morning.
Economic data today was relatively busy with Jobless Claims and the Philly Fed just coming out and Leading Indicators scheduled to come out at 10:00 AM. Initial and Continuing Claims both missed expectations coming in higher than expected. Philly Fed was an enormous beat relative to expectations with the headline reading coming in at 51.8 and one of its highest readings ever and the best since 1973. Prices Paid was also extremely elevated, though, so that won’t help quell concerns over inflation.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, an update on economic data out of Asia and Europe, a recap of all the major central bank announcements since the close yesterday (there were a lot!), the latest US and international COVID trends including our series of charts tracking vaccinations, and much more.
The chart below encapsulates the drama in markets that surrounded the FOMC meeting. Yesterday, yields were sharply higher ahead of the meeting and started to come back in leading up to and after the announcement. Overnight, though, the rally in Treasuries and drop in yields subsided, and this morning, no one wants anything to do with US Treasuries as the 10-year yield has risen well above yesterday’s high and 1.7% to its highest levels since January of last year.