The DC Today - Thursday, June 22, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 22 June 2023
⏱️ 8 minutes
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Summary
Today's Post - https://bahnsen.co/3NqpaFA
The Bank of England surprised markets by hiking rates a half point this morning (a quarter point had been expected).
Chairman Powell did his very best in front of the House yesterday to basically swear they have more rate hikes left in them (all the while swearing they are data dependent, with the apparent contradiction between promising something six weeks in advance of the data coming in that you are promising to be led by never really being explained).
But then … Atlanta Fed President, Raphael Bostic, came out and said he believes the Fed should hold rates where they are now for the rest of the year …
So if you don’t know what the Fed will do next, join the club. The futures market is up to a 77% implied probability that the Fed will hike at the late July meeting. I remain skeptical but not adamant. And the Fed remains content with ambiguity and public mixed messaging, with “trial ballooning” apparently a new policy tool in the toolbox.
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. |
| 0:14.6 | Hello and welcome to the Thursday edition of DC Today. My last day recording the DC today from Grand Rapids, Michigan will be |
| 0:23.1 | on the plane back to New York City tomorrow Friday. And again, kind of a boring day in markets. |
| 0:30.6 | There was a bit of up and down movement along the way, but when all of a sudden done, |
| 0:34.2 | the Dow closed down four points, not even, you know, one basis point. So flat day on the Dow, |
| 0:40.3 | the S&P was up a tad, I think 30 basis points or so in the NASDAQ up more as tech caught a little |
| 0:48.5 | bid and consumer discretionary has continued to do well. So you've definitely had a nice little junk rally in this period. |
| 0:57.1 | The 10-year yield was up seven basis points. Most of the shorter end of the curve was up around |
| 1:02.1 | the same. So the curve itself has only inverted further or stayed around the same level. It is not |
| 1:10.5 | tightened. And that, that inversion, |
| 1:14.2 | you're talking about it being basically back to 1%. What I mean by that is that a two year is |
| 1:19.6 | paying 1% more. It's like 99 basis points more than a 10 year. That's not back to the high level |
| 1:26.3 | inversion. We had back in March, at one point, |
| 1:28.6 | we were 108 basis points inverted, but it had come all the way down to 50 and stayed there |
| 1:34.8 | most of March, April, May, or mid-March to mid-May. And now it has widened back out a bit in |
| 1:41.2 | this inversion. And so I want to remind people that that's unhealthy. It is not |
| 1:45.9 | good, but it is not creating something that isn't good. It's signifying something that isn't good. |
| 1:51.6 | And that's one of the things I think is most misunderstood when people, sometimes they're very |
| 1:56.5 | ignorant and sometimes they're not so much ignorant as they are kind of making stuff up, |
| 2:02.2 | talk about the yield curve, is that the yield curve being inverted is not creating bad news. |
| 2:10.2 | It is signifying some form of instability or brokenness or dysfunction or something off the norm in |
| 2:17.4 | financial markets. And in this particular |
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