10-Year Yield Grinding Higher

Rates hold near multiyear highs, “double hike” probability for March meeting falls to 30%. Swap rates and Treasury yields held near their YTD highs one session after they exploded higher on the back of a strong jobs number. The likelihood of a rare 50 bp hike at March’s FOMC meeting fell to 30% after hitting 50% on Friday while the long end of the curve grinded upwards once again. The 10-year Treasury yield ended the day 1bp higher at 1.916%, one bp closer to 2%…

Cash balances start to drop at U.S. banks. Four weeks into 2022, U.S. banks are starting to see the large cash balances that were built up during the pandemic start to dwindle. Per the Fed H8 loan data report, the large U.S. banks and small U.S. banks have seen cash balances decrease 8.52% and 2.61% year-to-date, respectively. The lower cash balances has resulted in loan growth to start the year. Large banks have seen an increase to C&I portfolios to the start the year growing at a 9.92% annualized rate, while small banks have dominated in commercial real estate seeing growth at a 4.29% annualized rate.

Consumer price and sentiment data later this week  On Thursday and Friday, investors will get a look at how consumer inflationary pressures and sentiment kicked off 2022. On Thursday, January consumer price index data will be released with analysts expecting a 7.2% year-over-year headline increase, up from December’s 7.0% print. On Friday, the University of Michigan’s January consumer sentiment data will be released with analyst’s expecting a slight uptick from the prior month.