Greysteel Capital Markets Update | December 2019

December 3rd, 2019 by Keeley Byer

The Federal Reserve signaled last month that it was done cutting rates after making its third quarter-percentage-point reduction since July, bringing its target rate to a range of 1.5% to 1.75%. At an annual dinner for the Greater Providence Chamber of Commerce last week, Chairman Jerome Powell said, “monetary policy is now well positioned to support a strong labor market” and the interest rate policy would likely remain, however, if the economic “outlook changes, policy will change as well.” The FOMC meets again on December 10-11 for its final Summary of Economic Projections of the year…

Greysteel Capital Markets Update | November 2019

November 4th, 2019 by Keeley Byer

As anticipated, the Federal Reserve announced it will lower its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75% on October 30. This is the third rate cut this year but the Fed signaled that it plans no further cuts unless it sees “developments emerge that cause a material reassessment.” The Fed expects growth to continue and the job market to remain strong. On November 1, the U.S. Bureau of Labor Statistics reported total nonfarm payroll employment rose by 128,000 in October—economists expected 85,000 jobs—while job gains for August and September were revised up by 95,…

Greysteel Capital Markets Update | October 2019

October 2nd, 2019 by Keeley Byer

On October 1, the Institute for Supply Management (ISM) reported its index of national factory activity fell to 47.8 in September, its lowest level in over a decade. The 10-year Treasury yield dipped to 1.65% on the news. On September 18, the Federal Reserve announced that it will lower its overnight lending rate by 25 basis points to a range of 1.75% to 2.00%, as trade tensions between China and the United States continue to strain business conditions. The Fed meets again at the end of October and any further rate cut could depend on the U.S. September employment report, set for release…

Greysteel Capital Markets Update | September 2019

September 4th, 2019 by Keeley Byer

On September 3, the 10-year Treasury rate decreased to 1.47%, down 43 basis points from a month ago and its lowest level since July 2016, after a report on the U.S. manufacturing sector showed a contraction in August. The Institute for Supply Management (ISM) U.S. manufacturing Purchasing Managers’ Index (PMI) fell to 49.1% in August, the lowest reading in more than three years. Treasury rates were already under pressure as new U.S. tariffs on Chinese imports went into effect on September 1. However, President Trump said trade talks with Beijing are still planned for later this month in…

Greysteel Capital Markets Update | August 2019

August 2nd, 2019 by Keeley Byer

As anticipated, the Federal Reserve announced that it will lower interest rates by 25 basis points on July 31. The Fed cited what it called “implications of global developments” and “muted inflation pressures” as factors in its decision to lower the benchmark federal funds rate even as the U.S. economy is in the midst of its longest sustained period of economic growth. On August 1, the 10-year Treasury rate decreased to 1.90% on the news. In addition, President Trump announced he will add a new 10% tariff on $300 billion Chinese-made products on September 1 after negotiators failed to kick…

Greysteel Capital Markets Update | July 2019

July 2nd, 2019 by Keeley Byer

The 10-year Treasury rate decreased to 2.00% at the end of June, down 14 basis points from the previous month, on fears of further escalation in trade tensions between the U.S. and China. On July 1st, after the G-20 meeting between President Trump and Chinese leader Xi Jinping, Treasury yields rose slightly after the two agreed to resume trade negotiations. With U.S.-China trade talks back on track, analysts are anticipating a more modest quarter point decrease by the Federal Reserve at its next policy meeting at the end of July.

Greysteel Capital Markets Update | June 2019

June 4th, 2019 by Keeley Byer

As trade war fears rose and economic data disappointed, Treasury yields declined in May. The 10-year Treasury rate decreased to 2.14% at the end of May, down 37 basis points from the previous month. The stock market fared no better, either, as the S&P 500 lost 6.6% in May. These decreases, paired with the Trump administration’s recent move to impose punitive tariffs on Mexico, have investors anticipating a potential near-term economic downturn with a second front in the global trade fight. However, in early June, Fed Chairman Powell suggested trade tensions could lead the central bank…

Greysteel Capital Markets Update | May 2019

May 3rd, 2019 by Keeley Byer

On May 1, the Federal Reserve voted to hold interest rates steady, between 2.25% and 2.50%, meeting market expectations. The decision follows a much stronger-than-anticipated growth over the first three months of the year. Bureau of Economic Analysis data showed U.S. real gross domestic product (GDP) increased 3.2% in the first quarter of 2019, beating analyst expectations. While consumer spending surged to its highest level in over nine years in March, rising 0.9% overall (0.7% when adjusted for inflation), driven mainly by a jump in health care and motor vehicle expenditures. The 10-year…

Greysteel Capital Markets Update | April 2019

April 2nd, 2019 by Keeley Byer

While some analysts point to the dramatic reduction in interest rates over the past six months as an indicator of a possible recession, the economy and broader market are showing mixed signals. Retail sales unexpectedly fell in February while the Institute for Supply Management’s (ISM) Manufacturing Index rose in March. The S&P index was up over 13% in Q1 2019 and although economic growth continues to slow, the next several months will provide greater clarity in the direction of the U.S. economy.

Greysteel Capital Markets Update | March 2019

March 5th, 2019 by Keeley Byer

The U.S. economy grew a solid 2.6% in the fourth quarter of 2018, and increased 2.9% for the year. Economic growth has trended down over the last several quarters and many economists are projecting slower growth heading into 2019. The Federal Reserve appears content with holding off on any interest rate action in the near future but will observe how the U.S. and global economies perform through the summer. The 10-year Treasury remained largely stable throughout February as the benchmark rate rose just a few basis points for the month.