Daily Market Color

Fed Commentary Drives Volatile, Mixed Session

Rates mixed as Fed commentary sparks a volatile session. Treasury yields fell as low as 3.80% before selling off throughout the remainder of the day, the 10-year yield rebounding to 3.95% by the session’s end. The early day rally was fueled by Fed President Charles Evans’ concerns about the rapid nature of ongoing rate hikes, giving investors reason to believe that the Fed could be more conservative with future decisions. However, this momentum was offset by Fed President James Bullard’s later comments, in which he reaffirmed that inflation is a serious problem that the Fed must prioritize.

New home sales and durable goods releases offer mixed signals. New home sales rose ~29% MoM from 511,000 to an annual rate of 685,000 units in August despite analyst expectations that sales would decline by ~2% MoM. New home sales account for a small portion of overall home sales, but this is a positive development nonetheless. Durable goods orders, which measures new orders for long-lasting goods placed with domestic producers, declined 0.2% MoM. This was less than expected but sends a negative signal about economic growth. 

Day ahead. Several Fed members will make public comments tomorrow, including Raphael Bostic, James Bullard, Michelle Bowman, and Charles Evans. Data on wholesale and retail inventories will be released at 8:30 AM ET.

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