Daily Market Color January 10, 2023Rates Rise Ahead of CPI Data Treasurys sell off, equities rally ahead of Thursday’s CPI print. Swap rates and Treasury yields rose across a steepening curve today, the 2-year yield gaining ~4bps to 4.25% and the 10-year yield rising ~9bps to 3.62%. The move came ahead of CPI on Thursday, with many investors betting that the data would signal continued slowing of inflationary pressures. The optimism provided a boost to equities, the S&P and NASDAQ indices climbing .70% and 1.10%, respectively. Fed Chair Jerome Powell reinforces Fed independence, emphasizes commitment to controlling inflation. Powell’s comments were free of any major surprises. However, the Fed Chair did emphasize that the central bank will remain independent and steer clear of any role in climate-related decisions. On the inflation front, Powell noted that price stability is the “bedrock” of a healthy economy and said that controlling prices requires potentially unpopular measures in the short term by raising rates. Elsewhere, JPMorgan CEO Jamie Dimon made headlines by suggesting that there’s a “50% chance” the Fed will have to raise rates to 6%. Day ahead. Mortgage application data will highlight an otherwise quiet day, where the market will look to see how mortgage applications fared after last week’s level marked the largest decline in 3 months. Crude oil stock data will be released at 10:30 AM ET.
