Morning Report: The bond market is adjusting to the Powell re-nomination

Vital Statistics:

S&P futures4,6791.2
Oil (WTI)77.720.08
10 year government bond yield 1.65%
30 year fixed rate mortgage 3.31%

Stocks are flat this morning on no real news. Bonds and MBS are down.

The Treasury market is adjusting to the news of the Powell re-nomination apparently. Brainard was seen as more dovish, and therefore yields are adjusting to a more hawkish stance. The Fed Funds futures are now settling around a forecast of 3 rate hikes next year. Note that there is a global bond market sell-off as well, with yields in Germany and the UK rising big as well.

Demand for credit has returned to pre-pandemic levels, according to research from the New York Fed. Credit cards are leading the demand.

The Biden Admin will tap the strategic oil reserve in order to drive down prices. Several other countries will do the same thing. “The president stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic,” the White House said in a statement.

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