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A bond trader has just placed a record-breaking single bet by going long on December 2024 short-term interest rate futures. This strategy will pay off if the Federal Reserve cuts interest rates at least three times by the end of the year, a scenario that is not yet fully priced into the market following recent robust economic data and higher-than-expected inflation figures. The Secured Overnight Financing Rate (SOFR) futures — the tool used to assess market wagers on Fed interest rates — suggest that traders are anticipating a total of 68 basis points in rate cuts by the end of the year. What Happened: A significant transaction involving 75,000 December 2024 SOFR futures contracts

As financial institutions continue to raise their certificate of deposit (CD) rates, American savers find themselves presented with increasingly attractive opportunities to grow their money. These developments have been spurred by multiple Federal Reserve rate increases since March 2022, which have had a cascading effect on interest rates across the financial sector. According to Bankrate’s data, the average 1-year annual percentage yield (APY) on CDs offered by their institution partners has reached an impressive 5.27%. This figure is particularly noteworthy because it surpasses the yield on 2-year Treasury bonds by more than half a percentage point. This indicates that consumers

October jobs report numbers missed expectations Friday, and came in at nearly half of September's reported figures. Non-farm payrolls increased by 150,000 jobs in October, registering a steep decline from September's 297,000 jobs. The figure fell short of market forecasts, which stood at 180,000. One key reason for the deceleration is likely the United Auto Workers strikes, which resulted in a net loss of jobs for the manufacturing sector. Market Reaction To The US Jobs Report Treasury yields tumbled across the board. The yield on the two-year Treasury fell to 4.87%, a decrease of more than 10 basis points, while the 10-year Treasury yields fell by 11 basis points to 4.56%. The ben

Treasury yields continue to surge, defying expectations and causing further strain in the U.S. core bond market. On Tuesday, yields on the 2-year Treasury note reached 5.2%, marking its highest level in over 17 years. The last time short-term Treasury security yields were this elevated was back in June 2006 when the federal funds rate was holding steady at around 5% to 5.25%. This upward movement in yields followed the unexpectedly robust retail sales figures in September, published earlier today, which underscored the continued strength of consumer demand in the country. This, in turn, dispelled any concerns within the Federal Reserve about an economic slowdown. Additionally, infla

My firm, LCM Capital Management, has always been a big proponent of buying, whenever possible for our clients, individual fixed income securities such as municipal bonds, CD’s, Treasuries etc. Owning and managing an investment advisory firm, as my partner and I have for the last 23 years, we are constantly inundated by mutual fund companies or Exchanged Traded Fund (ETF) providers explaining the “benefits” to us, for our clients, in using their products. In their defense, it’s their job and if I was in their shoes, I would do the same thing since firms such as ours have already done the heavy lifting part which is finding and retaining clients. But I’m not one of them and I believe our clien

On CNBC’s "Halftime Report Final Trades," Liz Young of BNY Mellon Investment Management named Utilities Select Sector SPDR Fund (NYSE:XLU) as her final trade. Stephanie Link of Hightower said International Business Machines Corporation (NYSE:IBM) has a good yield. The company’s stock is up just 2% year-to-date, but is up 25% from its recent lows. "I like the software and consulting mix, which is 75% of the total revenue," she added. RBC Capital analyst Amit Daryanani initiated coverage on IBM with an Outperform rating and announced a price target of $188. The Armonk, New York-based company recently reported second-quarter earnings of $2.18 per share, ahead of the $2.01 Street estimat

With the Fed funds rate at 5.5%, its highest level since the early 2000s, the temptation of cash-like investments has never been more appealing, pushing investors to reconsider riskier assets such as stocks. While the Fed may opt to press the hold button this month, the end of rate hikes has not been yet declared. Indeed, the possibility that interest rates could remain high for far longer than many predicted only a few months ago appears to be becoming more realistic. The resilience of the U.S. economy in recent times has left many economists and analysts scratching their heads, prompting them to adjust their growth projections. This, in turn, has made the prospect of a looming re

The U.S. economy has emerged as the year’s unexpected star performer, with Federal Reserve officials poised to double their 2023 growth projections due to a series of positive indicators. From consumer spending to residential investment, data has consistently outperformed expectations, prompting economists to revise their forecasts. The unofficial estimate from the Atlanta Fed even suggests a remarkable 5.6% annualized expansion in Q3. This dramatic turnaround from just three months ago, when recession fears loomed, could force the Fed to rethink its 2024 interest-rate cut projections, according to Bloomberg. Chart: Atlanta Fed GDP Nowcast Is Expected To Hit 5.6% in Q3 2023

Financial safeguard tools are on sale these days and protecting your portfolio against sudden stock market declines, or simply speculating on them, has never been as cheap as it is now. This insight comes from the Global Equity Derivatives Research team at Bank of America, which recently published a note analyzing the cheapness of market hedging costs. “Since our data began in 2008, it has never cost less to protect against an S&P drawdown in the next 12 months, as high rates align with low implied vol and correlation to offer a historic entry point for hedges,” analysts at Bank of America stated. Traditionally, there are several ways to hedge against market downturns, including i

Traders appear to be backing out on the idea that the Federal Reserve will trim rates this year, as is apparent from the U.S. short-term interest-rates market, a report stated. Options open interest, which shows the amount of risk held by traders, declined sharply across a number of strikes shown by preliminary CME data released Monday, reported Bloomberg. This is a sign of capitulation following heavy pull-backs from rate-cut bets taken earlier, it said. Also Read: How To Invest In Startups The fears seem to be justified given the fact that Fed Chair Jerome Powell indicated the central bank could hike rates by another 50 basis points this year. He also reiterated the central bank's

Treasury yields rose during Wednesday Asian trading session ahead of Federal Reserve Chair Jerome Powell's testimony before Congress and as U.K. inflation came in higher than expected. Consumer Prices Index rose 8.7% from a year ago in May, reported Bloomberg citing the Office for National Statistics. Core inflation, which excludes volatile food and energy, rose unexpectedly to 7.1% from 6.8%, it said. Also Read: Best Penny Stocks Price Action: Yield on 2-year Treasuries rose as high as 4.74% compared to the lows of 4.66% seen on Tuesday, before cooling off a bit. Similarly, yield on 10-year notes rose to 3.76% against the lows of 3.7% seen the day before. "We will not hesitate i

Ahead of Federal Reserve Chairman Jerome Powell's testimony to Congress, Allianz chief economic adviser and noted economist Mohamed El-Erian said the central bank chair's message to the market was ‘confused and confusing.' ‘Confused because they said three things that are internally inconsistent. On the one hand, they increased the inflation forecast. They also increased the amount of hikes that they are anticipating. But on the other hand, they did not hike. So, that was an inconsistent set of outcomes,' he told CNBC. Also Read: How To Invest In Startups El-Erian also highlighted the mixed reactions in the marketplace. ‘You have those who believe that this was a committee outcome.

Andreas Steno Larsen, Founder and CEO of Steno Research, believes the banking turmoil is far from over as persistent core inflation may keep monetary policy tight in coming times. "Monetary policy is likely to remain tight as long as core CPI stays elevated, and with the metric being stuck at 5% annualized, it could be an argument to why Fed will keep rates high, which is the sole reason behind the latest banking turmoil," Larsen explained in a series of tweets. Also Read: How To Invest In Startups May Consumer Price Index (CPI) rose 4% on an annual basis, registering the lowest increase in two years. However, Core CPI, which strips out energy and food, stood at 5.3%, somewhat highe

Treasury yields jumped during the Asian trading session on Tuesday following a global sell-off in the bond market. The decline emerged in the United Kingdom. where investors and traders weighed on the possibility of extended rate hikes due to sticky inflation, reported Bloomberg. Market participants are also awaiting Federal Reserve Chairman Jerome Powell's testimony to Congress on Wednesday. The yield on the 10-year U.S. treasury rose as much as 3.82% before cooling off a bit. Australian yields with the same maturity rose eight basis points to their highest this year, reported Bloomberg. Markets had priced-in expectations that central banks would respond to signs of inflation cooling

Major Wall Street indices soared on Thursday as investors and traders began digesting the possibility the Federal Reserve's aggressive rate hike campaign is nearing its end. The Nasdaq Composite closed Thursday's session 1.15% higher while the S&P 500 gained 1.22% to hit their 14-month highs. Ross Gerber, President and CEO of Gerber Kawasaki Inc., believes the market has factored-in that the economy will not tip into a recession. "Rally rally as the new bull market gores more bears. Market is saying no recession and the Fed is done. The fed knows that higher rates will only kill more banks… you could see it in Powell’s face…," he said in his tweet. The SPDR S&P 500 ETF Trust (NYSE:SPY)

Morgan Stanley's top equity strategist Mike Wilson has reportedly reiterated his year-end target of 3,900 on the S&P 500 Index while warning that a profit recession is still underway. "Inflation is going to come down. It's not going to be good for stocks because that is where the earnings power has been coming from," said Wilson, according to a Bloomberg report. The strategist had voiced his view prior to the release of the Fed policy on Wednesday. Also Read: How To Invest In Startups The expert and his team of strategists had said in a note earlier they expect S&P earnings to drop 16% as against forecasts for a decline of just 2.4% this year from sell-side analysts who have raised

Peter Schiff, chief economist and global strategist at Euro Pacific Capital, said he doesn't believe in the hype on the Federal Reserve’s hawkish pause on rates. "If the #Fed really was hawkish it wouldn’t have skipped this rate hike. There’s a good chance that the Fed’s next move on rates will be a cut, not because #inflation is lower, but because the labor market finally cracks," Schiff said in his tweet. Also Read: Best Penny Stocks The economist's comments follow the central bank announcing a pause in its rate hike campaign after ten successive increases to tackle decades-high inflation. What did appear as a point of concern was the Fed's indication it may hike rates by another

Allianz chief economic adviser and noted economist Mohamed El-Erian has highlighted the one quote by Federal Reserve Chairman Jerome Powell which he thinks made many people perceive Wednesday's policy as hawkish despite the pause in rate hikes. "…it will be appropriate to cut rates at such time as inflation is coming down really significantly and again we’re talking about a couple years out," Powell had said Wednesday. Also Read: Best Penny Stocks El-Erian said the statement is the reason why many have described Fed's pause in rate hikes as hawkish after ten successive increases. "It is also the one that has most raised eyebrows given that the [Fed] has insisted that it's data depen

Bond traders appeared to be increasing their bets on the probability the Federal Reserve will likely tip the U.S. economy into a recession as is apparent from the steepening of the yield curve inversion. Bloomberg had earlier reported the story. Despite the central bank pausing its rate hike campaign for the first time since it began its aggressive monetary policy cycle, the Fed's indication that it could raise rates by another 50 basis points this year led to a sell-off in policy-sensitive short-dated securities, causing a rise in yields. At the same time, yields on long-dated bonds fell pushing the yield-curve inversion between two and 10-year yields to over 90 basis points, according t

Ross Gerber, President and CEO of Gerber Kawasaki Inc., believes that with inflation cooling down, the Federal Reserve's rate hiking cycle is likely to come to an end. "INFLATION IS DEAD. With the broken shelter number being the largest contributor to inflation, this number is actually negative IRL. Fed is done, bye bye and go away!" Gerber tweeted. INFLATION IS DEAD. With the broken shelter number being the largest contributor to inflation, this number is actually negative IRL. Fed is done, bye bye and go away!— Ross Gerber (@GerberKawasaki) June 13, 2023 May Consumer Price Index (CPI) rose 4% on an annual basis, the lowest in two years. Core CPI, which strips out energy and food

Back in March 2022, the Federal Reserve embarked on an unprecedented interest rate hiking cycle, aiming to quell a four-decade inflation surge. After 15 months of relentless interest-rate tightening, the U.S. central bank finds itself at a critical juncture. Will it simply hit the pause button, intending to resume tightening again in the near future? Or is this a definitive end to the Fed’s hiking cycle, marking a new chapter in monetary policy? The outcome of the FOMC meeting on June 14-15 holds significant implications for markets and the broader economy going forward. Current Market Expectations: Sit And Watch Until a couple of weeks ago, investors were pricing in over 200 b

Hedge funds continue to extend their short positions on short-term Treasury Bills at a time when there is a widespread opinion that the Federal Reserve's rate hiking cycle may not be over yet. Leveraged investors increased their net-short two-year Treasury positions for an eleventh straight week in the period to June 6, reported Bloomberg citing the latest Commodity Futures Trading Commission figures. That's the longest run on record according to data going back to 2006, it said. Also Read: How to Buy Treasury Bonds Yields on two-year treasury notes are already trading higher by about 96 basis points from the lows seen in early May. However, they are yet to reach the highs of over 5

Despite calls from many corners that the possibility of a recession has eased, some of the world's biggest bond managers are reportedly sticking to their forecasts for a downturn and advise hedging any bets on risky assets. The bond managers believe 10 consecutive rate hikes by the Federal Reserve have already done the damage while the U.S. banking collapses were a precursor to a bigger crisis as central banks continue to stay hawkish. Also Read: Best Penny Stocks Steve Ellis, global fixed-income chief investment officer at Fidelity International told Bloomberg that something akin to a credit crunch is what he is most concerned about. Central banks' continued tightening shows they'r

Despite the resolution of the debt ceiling standoff allowing the U.S. government to meet its obligations, Fitch Ratings has chosen to maintain its "Rating Watch Negative" stance on the U.S. rating, according to a statement released by the credit rating agency on Friday. The suspension of the debt limit is consistent with Fitch's expectations and the 'AAA' sovereign rating of the United States. However, Fitch is concerned about repeated political standoffs and last-minute resolutions that have undermined confidence in fiscal and debt responsibility. Governance Shortcomings Pose Risks To U.S. Economic And Financial Strengths Despite the U.S. dollar's dominant status as a reserve currency, a

The U.S. labor market is hot and continues to show tight conditions, posing a difficult dilemma for the Federal Reserve regarding whether to raise interest rates further or hit the pause button. Nonfarm payrolls increased by 339,000 in May, far exceeding economists' expectations of 190,000 and rising from April's upwardly revised 294,000 increase, the Bureau of Labor Statistics reported Friday.  The unemployment rate advanced from 3.4% to 3.7%, contrary to forecasts of an increase to 3.5%. The average hourly wage increased by 0.3% month-over-month, in line with expectations of 0.3% but slowing from the prior month's gain of 0.4%. Annual wage growth was 4.3%, falling short of both expectat