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The Fed just issued its first interest rate cut in four years. AdvertisementStocks got a brief leg up to a new intraday record on Wednesday after the Federal Reserve issued its first rate cut since 2020. "The Fed has given the market what it was looking for with the bigger 50-basis point rate cut," Joel Kruger, market strategist at LMAX Group said in a statement. Here's where US indexes stood at the 4 p.m. closing bell on Wednesday:AdvertisementStocks have historically reacted well to Fed rate cuts. "All we needed today was for Powell to validate market expectations that the Fed is acknowledging the downside risks to the labor market and responding appropriately."
Persons: Stocks, , Jerome Powell's, Joel Kruger, Morgan Stanley, Kruger, Tom Lee, Priya Misra, Powell, Jason Pride Organizations: Service, Federal Reserve, LMAX, JPMorgan Asset Management Locations: Glenmede
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailIf retail sales are weak the market will price in rate cuts 'very quickly', says JPMorgan's Priya MisraPriya Misra, JPMorgan Asset Management, joins 'Fast Money' to talk the impact of economic data on possible rate cuts.
Persons: JPMorgan's Priya Misra Priya Misra Organizations: JPMorgan Asset Management
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailRisk assets make sense as long as our base case remains soft landing, says JPMorgan's Priya MisraPriya Misra, JPMorgan Asset Management fixed income portfolio manager, joins 'Squawk Box' to discuss the latest market trends, state of the economy, the Fed's rate path outlook, strength of the labor market, and more.
Persons: JPMorgan's Priya Misra Priya Misra Organizations: JPMorgan, Management
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailInflation's moving away slowly and Fed will cut rates this year, says JPMorgan's Priya MisraPriya Misra, JPMorgan Asset Management fixed income portfolio manager, joins 'Squawk Box' to discuss inflation's trajectory, the bifurcation in views on outcomes, and much more.
Persons: JPMorgan's Priya Misra Priya Misra Organizations: JPMorgan, Management
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailHiring pace is likely to slow down, says JPMorgan Asset Management's Priya MisraPriya Misra, JPMorgan Asset Management fixed income portfolio manager, joins 'Squawk Box' to discuss the latest market trends, when is the good time to cut interest rates, and more.
Persons: Priya Misra Priya Misra Organizations: JPMorgan, Management
But there is a bigger, less-flashy counterpart to the equity market: the bond market. At the heart of the fixed income space lies U.S. Treasurys, one of the safest investments in the world. "We have not paid attention to the Treasury market because it was a market for foreigners or for the Fed," said Priya Misra, fixed income portfolio manager at J.P. Morgan Asset Management. "What we're observing is that [the new buyers] are a lot more price sensitive," said Anders Persson, global fixed income chief investment officer at Nuveen. Watch the video above to find out more about why major buyers are fleeing the U.S. Treasury market, the impact on yields and the economy at large, and how investors can best navigate the market going forward.
Persons: Priya Misra, Anders Persson, They're Organizations: Treasury, Morgan Asset Management, U.S, Federal Reserve, U.S . Treasury Locations: U.S, China, Japan
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe hedging property of Treasury bonds is here, says JPMorgan Asset Management’s Priya MisraPriya Misra, JPMorgan Asset Management fixed income portfolio manager, joins 'Squawk Box' to discuss the latest market trends, why she believes there's still a 25-30% chance or a hard landing, the Fed's rate path outlook, and more.
Persons: Priya Misra Priya Misra, there's Organizations: JPMorgan, Management
There's a worrying signal in the bond market that suggests a recession could soon arrive. Investors have typically pointed to the spread between the two-year and 10-year Treasury yields as an indicator of a coming recession. The two-year yield surpassing that of the 10-year bond has been a signal that's preceded every economic slump since 1955. Meanwhile, 10-year Treasury Inflation-Protected Security yields, which are adjusted for inflation, are currently hovering around 2.5%, Misra said. "The US Treasury yield curve is de-inverting very rapidly," Gundlach said in post on X, formerly known as Twitter, on Tuesday.
Persons: , Priya Misra, That's, Misra, It's, Jeff Gundlach, Gundlach, Buckle Organizations: Service, JPMorgan, Management, CNBC, Treasury Locations: Treasurys
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe 'disinversion' of the curve makes a hard landing a lot more likely, says JPMorgan's Priya MisraPriya Misra, JPMorgan Asset Management fixed income portfolio manager, and Carol Schleif, BMO Family Office CIO, join 'Squawk Box' to discuss the latest market trends, the Fed's inflation fight, the impact of higher Treasury rates on the equity market, and more.
Persons: JPMorgan's Priya Misra Priya Misra, Carol Schleif Organizations: JPMorgan, Management, BMO Family
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWe believe July was the Fed's last rate hike, says JPMorgan Asset Management's Priya MisraPriya Misra, JPMorgan Asset Management fixed income portfolio manager, joins 'Squawk Box' to discuss the Fed's latest rate decision, why she thinks the central bank is done hiking rates, and more.
Persons: Priya Misra Priya Misra Organizations: JPMorgan, Management
The odds of the Fed cutting rates later this year also increased. Consumer prices decelerated to 4.9% year-on-year, the 10th straight month of slowdown as prices react to the Fed's rate-tightening cycle. The two-year Treasury yield, which typically moves in step with rate expectations, slid from 4.05% before the CPI news and dropped to 3.908%. The dollar index eased 0.20% and equity markets rose as the CPI data suggested the Fed's most aggressive rate hikes in four decades were yielding results. U.S. crude futures fell 1.6% to settle at $72.56 a barrel, and Brent settled down 1.3% at $76.41 a barrel.
The likelihood the Fed cuts rates later this year also increased. "The Fed does not aim get rate policy right just in time, they aim to get it right over time." Consumer prices decelerated to 4.9% year-on-year, the 10th straight month of slowdown as prices react to the Fed's rate-tightening cycle. The two-year Treasury yield, which typically moves in step with rate expectations, slid from 4.05% before the CPI news and dropped to 3.904%. Gold prices slipped as the CPI data was viewed as mixed and triggered profit-taking by some investors.
Equity markets initially rose as the CPI data suggested the Fed's most aggressive rate hikes in four decades were yielding results. MSCI's gauge of stocks across the world (.MIWD00000PUS) edged down 0.06%, while stocks on Wall Street wavered after an early rally. CHINA CRACKDOWNForeign exchange markets had been treading water while markets weighed policymakers' rhetoric against traders' conviction that U.S. interest rates should fall. Emerging markets currencies rallied on Wednesday following the U.S. data, with MSCI's index (.MIEM00000CUS) up 0.15%. U.S. crude recently fell 2.06% to $72.19 per barrel and Brent was at $76.00, down 1.86% on the day.
The Consumer Price Index (CPI) rose 0.4% last month after gaining 0.1% in March, the Labor Department said on Wednesday. In the 12 months through April, the CPI increased 4.9% after advancing 5.0% on a year-on-year basis in March. Ahead of this reading Fed President John Williams warned that they were not done raising rates. I think the Fed will raise rates again in June and then pause. "There will be another CPI report before the Fed meets, and expectations are you will start to see the effect of rents easing."
US April CPI rise gives Fed little room for pivot soon
  + stars: | 2023-05-10 | by ( ) www.reuters.com   time to read: +7 min
The Consumer Price Index (CPI) rose 0.4% last month after gaining 0.1% in March, the Labor Department said on Wednesday. In the 12 months through April, the CPI increased 4.9% after advancing 5.0% on a year-on-year basis in March. Ahead of this reading Fed President John Williams warned that they were not done raising rates. "There will be another CPI report before the Fed meets, and expectations are you will start to see the effect of rents easing." The other thing is shelter, a huge component of CPI and it came in a little bit weaker."
Yields on U.S. 2-year Treasury notes have plunged over 100 basis points following the failure of some regional U.S. banks last month. But markets are pricing for a series of interest rate cuts starting just two months later, underscoring an exceptionally large divergence from the central bank's own view. That recent downward trend in yields is forecast to continue further, according to the April 5-12 poll of over 60 bond strategists. However, in the coming three months, yields on both 2-year and 10-year notes were expected to rise 20 and 25 basis points, respectively, before resuming their fall. Relatively high volatility has also been a driver of yield forecasts over the past few months.
The recent banking failures have opened up a Pandora's box, TD strategist Priya Misra warned. The gaping hole in banks' balance sheets will remain even as volatility fades, she said. "I think you opened a Pandora's box and massive unrealized losses sitting on banks' balance sheets," she said, adding that banks would likely need to sell their assets or raise capital. "The market will have to get used to a Fed that's not being responsive enough," Misra warned. Other Wall Street analysts have warned of a recession to strike this year, which could weigh heavily on stocks.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe Fed has no choice but to engineer a hard landing: TD Securities' Priya MisraPriya Misra, global head of rates strategy at TD Securities, joins 'Squawk Box' to discuss where rates are headed, what would fall to lower inflation, and more.
Inflation has probably peaked, says TD Securities' Priya Misra
  + stars: | 2023-02-24 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailInflation has probably peaked, says TD Securities' Priya MisraPriya Misra, global head of rates strategy at TD Securities, joins 'Squawk Box' to discuss her thoughts on the bond markets, rising rates, and more.
Watch CNBC's full interview with TD Securities' Priya Misra
  + stars: | 2023-02-24 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC's full interview with TD Securities' Priya MisraPriya Misra, global head of rates strategy at TD Securities, joins 'Squawk Box' to discuss her thoughts on the bond markets, rising rates, and more.
Bond strategists at JPMorgan noted recently that the U.S. Treasury market is already priced for a recession and not just for the heightened risks of one. Already off their peaks from late last year and early 2023, major benchmark government bond yields have eased 20-40 basis points since, and more than 50 basis points on the particularly rate-sensitive U.S. two-year Treasury yield. That is about 30 basis points lower on the one-year horizon than a poll published in December. This would extend one of the longest periods on record where two-year yields have been higher than 10-year ones, a yield curve inversion. The poll expected German bund yields to rise from their current 2.25% to around 2.4% in three and six months.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailService consumption is not slowing down into recession territory, says TD Securities' Priya MisraPriya Misra, global head of rates strategy at TD Securities, and Michael Zinn, UBS senior portfolio manager, join 'Squawk Box' to discuss the economy, a potential pivot from the Federal Reserve, and more.
UBS's Mark Haefele says there's a strong possibility the January market rally is a "head fake." But the rally has sputtered to a halt after US stocks sold off this week to erase half the gains they've made in 2023. "But it remains possible that the rally is a 'head fake,' and that economic data will ultimately disappoint." This may be due in part to a strong labor market keeping wage growth robust. And despite energy's astonishing rally last year, Haefele still believes that there's still room to go for the sector.
Inflation is expected to cool down in 2023, partly due to the Inflation Reduction Act. Last March, Fed Chair Jerome Powell embarked on an aggressive interest rate-hiking cycle, while President Joe Biden signed the Inflation Reduction Act in August. 20 stocks to profit from taming inflationAccording to Lee, IRA tailwinds could drive over 50% upside in earnings or stock prices in 20 select stocks as early as 2023. Surprisingly, the 20 stocks poised to benefit from IRA also included names from energy services and financials, two sectors with "underappreciated upside," Lee wrote. Below are the 20 stocks Lee and his team identified as the biggest IRA beneficiaries.
As equities plunge and recessionary fears grow, bond yields look increasingly enticing. "Fixed income starts to look attractive if recession risks are growing," said Priya Misra, head of global rates strategy at TD Securities, in a recent interview with Insider. To offset these more liquid assets, Misra recommended investors look to pick up yield, such as with mortgage-backed securities, which she said look attractive at their current spreads. However, Misra believes that the current 10-year Treasury yield of around 3.7% feels a little too low, especially since she forecasts rates climbing slightly higher in the near future. While investment-grade bonds have less default risk, Misra believes investors may find it hard to pick and choose winning sectors within a high-interest-rate economy.
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