The DC Today - Thursday, July 27, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 27 July 2023
⏱️ 8 minutes
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Summary
Today's Post - https://bahnsen.co/4563eH1
As balanced as Jay Powell’s comments were yesterday in the presser following the latest and potentially last 25 bps rate hike of 2023, markets opened in rally mode taking comfort in his ‘data dependency’ rate path commitment over what could have been otherwise hawkish comments. We then got an entire slew of strong economic data around 830AM EST with durable goods orders, jobless claims, home sales, and most notably Q2 GDP coming in ahead of expectations that brought back the ole ‘good news is bad’ jitters into markets and we reversed course. Bonds sold off across the curve, but more longer than short and the yield curve steepened to -92 bps in 2/10’s. So, while stocks did put an end to a 13 day consecutive advance and the 10 YR is now flirting again with 4%, what we really saw was more support for the soft landing narrative and candidly, if this is what a recession looks like, I’ll take it. All discussed in more depth in the video podcast below, as well as a twofer in Ask David today as an added bonus. Enjoy and reach out with questions.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:14.5 | Hello and welcome to D.C. today. It is Thursday, July 27th. Yesterday, we had a fit policy meeting end, and lo and behold, they raised rates 25 basis points, which was largely kind of known. |
| 0:28.7 | The comments yesterday were perceived to be more benign. It was basically just sort of punting on whether they were going to raise rates next quarter or in September, |
| 0:37.8 | sorry, or not, and just saying they were dead independent. So through the night and into this |
| 0:42.2 | morning, as that feeling of comfort was kind of felt in markets a little bit more, markets were |
| 0:47.6 | actually up this morning. We're up over 100 points to start the day, the narrative just being |
| 0:52.3 | more of a doveish feeling out of the Fed versus hawkish. |
| 0:55.7 | And then about 8.30 Eastern, we had a whole slew of different economic data come out. |
| 1:01.3 | We had GDP numbers come in better than expected. We had job list claims coming better than |
| 1:05.9 | expected. We had durable goods orders better than expected. And we had some pending home sales |
| 1:10.4 | better than expected, which you had some pending home sales better than |
| 1:10.8 | expected, which you would think would be good. I do. We want good economic numbers, but markets |
| 1:17.1 | tended to kind of price in the old, you know, good news is bad, and maybe that means the Fed is going |
| 1:22.1 | to raise rates again in September versus yesterday. We thought they weren't. So the Fed expectations, the futures |
| 1:28.6 | are now sitting at about a 65, 35, 35, meaning that they don't raise rates in September. Again, |
| 1:35.0 | that's two months away, 35 that they will. And I think it was more like 75, 25, 25 yesterday. |
| 1:40.5 | We have more data coming out the next couple of days. There's PCE print tomorrow, which I think |
| 1:47.0 | markets will pay attention to quite a bit. Headline is seen moving down from 4.6 to 4.2. So we'll |
| 1:53.9 | check that out tomorrow. But to unpack today, you know, the, look, GDP was closed at 2.4% up on the quarter. We were expecting something like |
| 2:04.7 | 1.5, 1.8, something like that in consensus estimates are quite a bit better than expected. The |
| 2:11.5 | main culprit was, was still the consumer. You know, we have a strong consumer. A healthy |
| 2:16.6 | balance sheet, we all like to spend, |
... |
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