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Here’s what we’ve got for you today:

1. Biggest single-day jump since Oct ‘22: Market Update 🪩

2. Jerome Powell on 60 Minutes ⏱️

By the way, this article Fed Coffee Break ☕ is the most clicked link in this newsletter, you should check it out if you are interested.

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[Total Read Time: 3-4 min]

Rates Today 📈

Biggest single-day jump since Oct ‘22: Market Update and Synopsis 🪩

The biggest single-day jump since October of 2022 - that is what happened on Friday.

If you have buyers out looking - or even those that went under contract this weekend - you likely saw the whiplash in full effect.

Rates tumbled throughout Wednesday and Thursday following the Fed meeting - falling nearly 65 bps over two days.

Early Friday morning the market was hit with the “Nonfarm Payrolls” data and it came in way higher than expectations (353k vs 180k forecast). Remember - labor market strength means higher rates. The result was an immediate drop in the bond market - falling over 70 bps in a single day. As CNBC put it “no one predicted a jobs report like this”

Talk about a whiplash for buyers…rates moved over .25% (PERCENT) in one day.

What does it mean for the future?

Here’s what market commentator Matt Graham had to say in his daily blog on Friday:

This week, we are already seeing more pullback in interest rates - falling another 50bps this morning. Frankly, I do not expect much positive news this week with little to no economic data being released.

Next week may be the first time we see some positive news. Tuesday (2/13) we will see Core CPI for January. This will put to test Powell’s theory that inflation is coming down despite the hot jobs report on Friday.

If we see some positive news on the 13th, we may see improvement from interest rates.

For March, all signs are pointing to a rate cut being “unlikely” as JPow said in his interview. Hopefully, with good data, that would mean a cut in May.

Jerome Powell on 60 Minutes ⏱️

Here are key takeaways from MishTalk -

1. Powell said the fiscal path is unsustainable and that it was urgent to fix it. Everyone knows the path is unsustainable, but getting the Fed to say the need to address the problem is “urgent” was extraordinary.

2. Powell said inflation will moderate while noting “people are experiencing high prices” and the overall price level will not come down.

3. Powell still does not seem to grasp the true nature of the failure of Silicon Valley Bank, blaming it on “uninsured deposits”. I note the true problem, allowing banks to speculate on interest rates.

4. Powell said geopolitical risk are greatest threat to the world economy

5. Powell acknowledged people are struggling to get mortgages and housing is not affordable. He fails to admit (most likely even notice), Fed policy is the reason.

6. Powell downplays the commercial real estate problem as manageable.

7. Powell said last bits of normalization are probably gonna take a couple of years but this isn’t big stuff.

8. Powell does not foresee a recession. Happy days are ahead.

Thanks for reading - that is all we have for today 😎

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— Michael F DiLucchio