Daily Market Color January 10, 2022Rates to the Moon Rates only go up? It feels like it after swap rates and Treasury yields notched their 6th consecutive daily increase, though bulls will look at the late fade as a potential sign of weakness in the recent trend. Much of today’s move was concentrated in the front end of the curve, 2-year rates selling off by 3 basis points to close at 0.89%, capping off a chart that looks more at home in crypto-land. Fed Funds futures now price in an 80% likelihood of a Fed rate hike in March, perhaps spurred on by former NY Fed President Bill Dudley’s calls for 4-5 rate hikes in 2022. December Consumer price data out on Wednesday Inflation, inflation, inflation. No matter where you go for markets news, rising prices continue to grab headlines. We will get another look at inflationary pressures with the release of December’s consumer price index on Wednesday. Analysts are expecting a year-over-year headline increase of 7.0%. up from November’s 6.8%. Powell and Brainard confirmation hearings this week. Fed Reserve Chair Jerome Powell will appear before the Senate Banking Committee tomorrow to begin his second term confirmation hearing, while current Fed Governor Lael Brainard will start her hearing for Fed Vice Chair on Thursday. Committee meetings are the first step in the confirmation process which will eventually lead to full Senate vote where a majority is required to be confirmed. The hearings come at a critical time in the markets as rates have sold off since the start the new year, and the S&P has started the year down 2.4% as investors prepare for the Fed’s tightening cycle to begin sooner than expected.
