Taking a ‘Peak’ at Rates

November 6, 2023

Taking a ‘Peak’ at Rates Photo

The past week finished with a strong risk-on rally. The spark that ignited the rally seemed to be the Treasury refunding announcement on Wednesday and its plans to offer less duration than markets expected.1 The 10-year Treasury subsequently rallied from almost 5.00% to 4.66% on Thursday. Friday’s Goldilocks non-farm payrolls number added to the rate rally as the 10-year Treasury moved to 4.57%. On top of the move lower in rates, there was another bullish technical for risk assets and high yield in particular as Ford Motor Company was upgraded back to investment grade, removing approximately $50 billion in bonds from high-yield indices.2

The week ahead is light on economic releases, so the risk-on narrative could continue this week.3 The next major economic release will likely be October’s consumer price index (CPI) on November 14. There are several Federal Reserve officials expected to speak this week and investors can decide if rates have seen their peak. Friday delivers the University of Michigan consumer sentiment and inflation expectations surveys. Earnings season continued last week but is winding down for calendar year reports, which should allow for markets to further digest results and expectations for next year. Today’s focus will be on the last few earnings reports, China’s trade numbers (Monday night) and the Reserve Bank of Australia’s rate decision (also Monday night).4




1U.S. Department of the Treasury – Quarterly Refunding Statement of Assistant Secretary for Financial Markets Josh Frost; 11/1/23

2Yahoo Finance – Ford’s Return to Investment Grade Solidifies Era of Rising Stars; 11/1/23

3MarketWatch – U.S. Economic Calendar; as of 11/6/23

4CMC Markets – APAC Week Ahead: Bottoming Out?; 11/6/23

Tags: Rally | 10-Year Treasury | Economic data | Markets | Federal Reserve

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