Update 1/18/2023
Update 1/18/2023 Ten-year Treasury yields dropped to 3.38% percent this morning, the lowest level since early September of last year. The Fed funds rate at that time was about to be lifted to 3.25%, while today the rate stands at 4.50% and is expected to be lifted to 4.75% at the FOMC meeting in early February. The catalysts behind the move lower in rates since the beginning of the year have been lower inflation readings that have worked to confirm market sentiment that peak inflation has occurred, along with a consequent slowdown in the expected pace of Fed tightening to 25 basis points in February, with a residual increase or two expected by the July meeting. Futures markets then anticipate rate cutting to commence in the second half of this year. Today’s data points for retail sales and industrial production were quite weak, and if the December pace in sales