Perspectives
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Monthly Macro Monitor: August 2024
Read More- In August, the Federal Reserve held its annual economic symposium in Jackson Hole. Chair Powell conveyed a very dovish message during his keynote speech, remarking that “the time has come for policy to adjust” and “the direction of travel is clear,” though the timing and pace of rate cuts will continue to be data dependent.
- Consistent with the Fed’s heightened attentiveness to employment that was signaled at the July FOMC meeting, Chair Powell also noted that “the cooling in labor market conditions is unmistakable” and that the Fed does “not seek or welcome further cooling in labor market conditions.”
- These comments came just days after the Bureau of Labor Statistics revised nonfarm payroll growth down by 818,000 jobs, or almost 30%, from previously reported levels for the trailing 12 months ended March 2024.
- With the Fed now giving equal focus to both sides of its dual mandate – price stability and maximum employment – the market repriced to the expectation of 100 basis points of rate cuts by year-end.
- Against this backdrop, benchmark interest rates declined in August, the yield curve steepened, and current coupon Agency MBS spreads to blended 5- and 10-year swap and Treasury rates tightened modestly.
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Monthly Macro Monitor: August 2024
Read MoreA quick update on the market environment, including key rate and spread trends that are top of mind for Agency MBS investors.