The FOMC saw a unanimous unchanged decision today keeping Fed Funds at 5.25-5.50%. A couple of highlights to their statement is that they added that “inflation has eased over the past year” but remains elevated. They also added the word “any” in regards to determining the extend of additional policy firming that may be appropriate to return inflation to 2% over time. We believe J Powell will try to reverse some of this bond move post this decision as rates have significantly fallen in the front end with the US Govt 2Y dropping 18bp after the announcement:
All of this action is pushing the US Govt 10Y/ Fed Funds spread back into the rate cut zone which we last saw during the June- August period, hitting -127bp today with the low coming in May at -175bp, which would see the 10Y dipping to 3.55% should this extreme be met again:
OK Powell is speaking now so we will be back later!
DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of or from the author Mike Agne owner of Magnelibra Capital Advisors. Magnelibra the CTA and its proprietary long/short commodities, futures and options managed accounts may hold long and or short positions in the various futures and markets that Magnelibra covers. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed. Please remit any inquiries to michael.agne@magnelibra.com especially if you are interested in opening an individual managed futures and options account to compliment your overall investment portfolio. Please visit https://magnelibra.com for more information.
