Correspondent Blog

Global Inflation Worries have Treasuries under Pressure While a China-led global slowdown led to higher Treasury prices on Monday, today it’s higher UK inflation that has Treasury yields heading higher.   In a reminder that inflation is not only a domestic story but a global one, UK inflation accelerated to the highest level in 40…

China Weakness Has Treasury Prices Higher A trio of reports out of China overnight suggest the second largest global economy has hit another soft patch and that has risk assets on the back foot this morning with Treasuries in the green.   Retail sales, industrial production and investment all slowed in July and the jobless…

Cooler Inflation Numbers Continue to Roll In First, it was the cooler-than-expected CPI report on Wednesday. That was followed by July PPI yesterday that printed negative for the first time since April 2020. That was joined this morning by a better-than-expected Import-Export Price Index.   Admittedly, this data series doesn’t carry the weight of the…

Finally, a Cooler CPI Report For the first time in what seems like forever, CPI came in cooler than expected and markets, both Treasuries and stocks, are rallying as a result.   The overall inflation rate was unchanged for the month versus the 1.3% increase in June and better than the 0.2% expected. It’s the…

Treasuries Shrug Off Strong July Jobs Report Treasury prices are higher this morning as the downdraft created by the stronger-than-expected July employment report was short-lived. We remain hard-pressed to see a catalyst to materially higher rates in the near-term as the market interprets the hot jobs market as a reason for the Fed to remain…

Strong Job Growth Continues and Wage Gains Accelerate Nonfarm payrolls increased 528 thousand with those gains continuing to be widespread while the unemployment rate dipped a tenth to 3.5%. Expectations were for 250 thousand jobs and the increase was well above June’s 398 thousand new jobs. It’s the highest monthly gain since February’s 714 thousand…

Fed Pushes Back on Thoughts of a Dovish Pivot   Yesterday, a pair of Fed officials firmly pushed back on the notion that Fed Chair Powell’s comments after last week’s 75bps rate hike represented something of a pivot to a more dovish Fed in upcoming meetings.   San Francisco Fed President Mary Daly and Chicago…

July Jobs and ISMs Headline Releases this Week There once was a time when Minneapolis Fed President Neel Kashkari was easily the most dovish member of the FOMC. The fact he was on the Sunday news shows yesterday reiterating the hawkish case is just another sign of how intent the Fed is in getting inflation…

Weak European PMI Readings Boost Treasury Prices Treasury yields are lower this morning after EU composite PMI readings unexpectedly slipped below 50.0 earlier today. Anything below 50 signals contraction and the recession warning sent EU-based yields lower and Treasuries have followed suit on what should be a quiet Friday trading day here.   We will…

For Now, Focus is on Europe Treasuries are finding a bid this morning as concerns re-emerge over possible energy disruptions in Europe which could slow the global economy.   The EU proposed the union cut gas consumption by 15% to be better prepared for a possible full cut-off of gas by Russia heading into the…

75bps Returns as the Expected Rate Hike for Next Week The initial chatter about a possible 100bps rate hike that came after the ugly June CPI report has died down and a 75bps rate hike has returned as the consensus outlook for next week’s FOMC meeting.   The chatter died down immediately after Friday’s University…

Examining Bond Portfolio Trends: Second Quarter 2022 Beginning in May 2012, we started tracking  portfolio trends of our bond accounting customers here at the Correspondent Division of SouthState Bank.  At present, we account for over 130 client portfolios with a combined book value of $13.5 billion (not including SouthState Bank), or $104 million on average…