Yield Curve Flattens as Fed Continues to Telegraph Rate Hike(s)

The two-year treasury yield hit its highest level since March 15th as the Fed continues to telegraph a rate hike in coming months. Meanwhile, the 10-year yield remains relatively low at 1.84% as foreign buyers are fleeing ultra low 10-year yields in Europe and Asia. Oil prices continue to stabilize, hitting a 7 month high near $50 per barrel. This is welcome news for the economy as home and car loan defaults are spiking in oil dependent regions such as Houston. Recent economic reports (new home sales, home starts, etc.) are exceeding expectations. Markets will watch upcoming data closely leading up to the Fed’s next meeting in June. Futures indicate a probability of a rate hike by September. The June meeting is set for 10 days before the British vote to stay or leave the European union. Regardless of the data, the Fed may choose to wait.     Stay tuned

David R. Pascale, Jr.