Rates Rise as Powell Testimony Concludes

Rates rise despite softer Powell commentary. Swap rates and Treasury yields rose across the curve again today, the 2-year yield climbing over 6bps to 5.07%, while the 10-year edged closer to 4%, now sitting at 3.99%. The move came despite a more dovish tone from Fed Chair Powell, after he clarified that a more significant 50bp hike at the upcoming FOMC meeting is not the default, and that “no decision has been made on this, but if the totality of the data were to indicate that faster tightening is warranted, we’d be prepared to increase the pace of rate hikes.” Elsewhere, equities were mixed on the day, with DOW taking a slight loss and the S&P and NASDAQ rising.

Fed Beige Book says economic activity increased in early 2023. The March 2023 Beige Book released by the Fed today provided anecdotal evidence of modest economic expansion in early 2023. Consumer spending was generally steady, though some of the 12 districts represented in the report saw increases in retail sales. Labor markets continue to remain strong, with employment continuing to increase at a modest pace, and labor availability increased only slightly though firms continue to struggle finding workers with the needed skills. Wages continued to increase at a moderate pace, but some districts noted easing pressures and expect wage increases to moderate further this year.

Day ahead. Initial jobless claims, expected to increase to 195k after coming in at 190k two weeks ago, will highlight an otherwise quiet session. Hawkish Fed voter Michael Barr will make public comments at 10 AM ET.