Morning Report: Fed week

Vital Statistics:

 LastChange
S&P futures4,7084.2
Oil (WTI)71.48-0.18
10 year government bond yield 1.46%
30 year fixed rate mortgage 3.33%

Stocks are higher as we head into the December FOMC meeting. Bonds and MBS are up.

The FOMC meeting is scheduled for Tuesday and Wednesday. The Street is looking for no changes in the Fed Funds rate, however the expectation is that the Fed will reduce its purchases of Treasuries and MBS at an accelerated rate. The Bank of England and the European Central Bank will all meet this week as well. Bond yields have been correlating pretty tightly globally, so it pays to watch what happens to yields overseas.

The Atlanta Fed’s GDP Now estimate is heading higher again. The current modeling has Q4 GDP coming in at 8.7%. Note that this is being driven by inventory build. With higher inflation in place, there will be more noise in the GDP numbers in general. Note the Street is less optimistic than the Atlanta Fed.

Aside from the FOMC meeting, we will also get retail sales and housing starts this week. Retail Sales will carry added weight given that it will be a good read on the holiday shopping season.

Better.com’s CEO is taking leave effective immediately, as the mass firing over Zoom didn’t go over the way he had hoped. Better did raise capital at the same time, and I wonder if the investors demanded he do a layoff as a condition of financing. My guess is that they wanted the layoffs and severance payments to hit this year for tax reasons, which would explain why he didn’t do it early next year.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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