Fed Declares June Meeting “Live” as Inflation Ticks Up

A recent appearance by two Federal Reserve Presidents and today’s Fed Minutes release has served notice on “complacent” investors that may be underestimating the timing and pace of interest rate hikes. This week’s bullish reports on industrial output, housing construction and inflation indicate quickening growth after the first quarter’s reports painted a picture of stagnant growth and extended low rates. Wage growth for April hit its highest rate since February 2009. The 10 year Treasury closed at 1.85%, the highest level since May 2nd. Earlier this week, the yield curve was flattening, but Tuesday’s reports have put markets on notice. The next few weeks will see Treasury prices reacting strongly to new data in advance of the late June meeting.    Stay tuned

David R. Pascale, Jr.