Three Things to Know & Watch

Apr 4, 2022

By Bill Hornbarger, Chief Investment Officer

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Three Things to Watch

  • On Wednesday, the Federal Open Market Committee releases the minutes of its last Fed meeting when the Fed raised rates from the 0% lower bound. The minutes will be parsed for thoughts on timing and degree of additional rate hikes as well as any plans to shrink the balance sheet.
  • Economic reports to watch include the ISM service index, updates on factory orders and jobless claims. Last week’s strong employment report and price data (personal consumption expenditures) have markets believing the Fed is behind the curve in terms of rate increases to cool inflation.
  • In addition to the FOMC minutes, multiple Fed speakers hit the tapes discussing the economy. St. Louis Fed President Jim Bullard speaks on Thursday about the economy and monetary policy. He was the lone dissenter at the most recent meeting, voting for a larger (50 basis point) increase in the target Fed funds rate.

Three Things to Know

  • The 10-year to 2-year U. S. yield curve briefly inverted this week and closed the week at a negative 8 basis points. The U.S. yield curve has predicted a recession (by inverting) on each of the last six occasions dating back to 1980. (Source: The Market Ear)
  • Contrary to popular belief, U.S. stocks generally did better during U.S. Federal Reserve (Fed) tightening cycles than during Fed easing schedules. That’s because Fed tightening occurred in the second half of U.S. business cycles 67% of the time, and Fed easing overlapped with U.S. economic recessions 67% of the time. (Source: Invesco)
  • Major league baseball opening day is on Thursday (April 7). A national event, Opening Day has also become a “political pitcher’s” arena for U.S. presidents to show their “stuff.” On April 14, 1910, President, and baseball enthusiast, William Howard Taft, attended the home opener in Washington D.C. Since then, 11 sitting U.S. presidents have tossed out the season’s ceremonial first pitch. One standout, Harry S. Truman, showcased his ambidextrous talent when he threw out balls with both his right and left arm in 1950. However, the record for most consecutive opening day honorary pitches thrown is probably held by Detroit Wolverines catcher Charlie Bennett. After both his legs were amputated following an 1894 train accident, he threw out the first pitch in Bennett Park until his death in 1927. (Source: The Baseball Almanac)

The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.