Market Tribune

Real-time macroeconomic announcements brought to retail investors. Unbiased retrospective surrounding equities, rates, derivatives, FX, and cryptocurrencies.

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Today’s retrospective on rates:

The tug and pull between the Federal Reserve’s monetary policy stance and our governments fiscal policy adjustments post-election cycle have created a whipsaw of a chart for yields. Combine that with a slew of economic data and investor confidence measures and it creates a propensity for volatility in the product. 
On May 16th investor confidence was tested as Moody’s Corporation, a financial services company that provides credit ratings, lowered America’s sovereign debt rating from Aaa to Aa1 citing rising net interest costs, looming tax cuts, a growing debt pile, and political gridlock.  U.S. Treasury Secretary Scott Bessent made an appearance a few days later to call Moody’s a “lagging indicator.” Bessent has been a long-time proponent of rate cuts as he believes lower rates creates opportunity for economic stimulus. 
He argues that the market is pricing in rate cuts by making a comparison of the federal funds rate versus the 2-year yield. For perspective, the federal funds rate is the interest rate at which banks lend to each other overnight and it’s a key indicator of monetary policy set by the FOMC (Federal Open Market Committee).  The 2-year treasury yield is currently trading below the fed funds rate.
Over the weekend, we recently saw volatility in yields as U.S. President Donald Trump announced he would delay the implementation of a 50% tariff on goods from the European Union. The European Central Bank (ECB), which covers monetary policy over the Eurozone, has cut interest rates 7 times in a row.  These rate cuts have ironically led to strength in the Euro versus U.S. dollars (EUR/USD).   Traditionally, higher rates lead to a strengthened local currency as investors flock to buy the bonds with the higher yield.  In the case of EUR/USD we notice the inverse.  As U.S. yields trend higher, the dollar index ($DXY) has weakened and as ECB continues down its rate cutting path the Euro has strengthened.
President Trump has been critical of the Fed and its chairman Jerome Powell with their “lack of action” regarding rate cuts.  The FOMC has kept their target range unchanged at 425-450 basis points for the third consecutive meeting. Powell has made comments recently on his reliance on economic data to frame decision-making ultimately to service the Fed’s dual mandate of maximum employment and price stability.  Powell has taken the slow, cautious approach citing a period of economic uncertainty as tariffs could impose increased supply shocks to the global economy. 
There are seven Federal Reserve officials who believe these cuts will come during the back half of the year with the average consensus being two cuts. According to the CME Fedwatch tool for the June 18th meeting, there is a 94.4% chance to keep the current target range (425-450 bps).  If we look out to December 2025, there is a normal distribution curve but the expectation is 39.3% chance of 375-400 bps for the target range signaling the market agrees with those seven Federal Reserve Officials. 
The Micro 10-year yield futures (/10Y) currently sits at 4.444 but has trended higher since the beginning of April. Being sensitive to the macroeconomic and political landscapes, we’ve seen yields pull back since the pause of the additional 50% tariffs on the European Union. The yield future is currently trading above all three Simple-Moving Averages (50-day SMA, 100-day SMA, 200-day SMA) and is sitting slightly above neutral for the 14-period Relative Strength Index with a reading of 52. According to the CFTC Commitment of Traders report published May 20th, there is little interest for yield contracts.  Open interest currently sits at 4001 total contracts and has been reduced 740 contracts week over week. Dealers/Intermediaries and Asset manager/institutional do not hold positions in this contract while leveraged funds are overwhelmingly long at 3299 total contracts.

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Retiring boomers watching Wharton MBAs trying to run their business after buying it with 90% debt

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The US is spending $50 billion on data center construction, exceeding the combined spending on airports, ports, and mass transit, per Bloomberg.

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BREAKING $GME 13D/A FILED

GAMESTOP NOW OWN 9.8% OF EBAY DIRECTLY AS OPTIONS ARE EXERCISED

https://t.co/37BF0OTDs8…

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$ASML is giving employees globally a one time bonus of $22,862

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“Series M”

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BREAKING: Data analytics platform Databricks is raising a $3 billion Series M at a $188 billion valuation led by Coatue

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NETFLIX SEES 3Q EPS 82C, EST. 84C

*NETFLIX SEES 3Q OPER MARGIN 33.2%, EST. 33.5%

$NFLX

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BREAKING: Elon Musk acquires Jacksonville power company APR Energy in a deal valued at more than $1,000,000,000.00.

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AST SPACEMOBILE $ASTS ANNOUNCES PROPOSED PRIVATE OFFERING OF $1.0 BILLION OF CONVERTIBLE SENIOR NOTES DUE 2034

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Payments company Stripe and private equity firm Advent International have made a joint offer to ​acquire PayPal Holdings, $PYPL, for $60.50 per share, per Reuters

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IRAN'S MOHAMMAD MARANDI: TEHRAN'S OPERATING ASSUMPTION IS THAT THE US MAY ONCE AGAIN SHIFT TOWARD RESTARTING THE WAR ON IRAN – AL MAYADEEN

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Fed's Miran submits his resignation from the Fed board effective on or shortly before Warsh's swearing in as Chair.

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The long-stalled Crypto Market Bill wins key Senate Committee vote.

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BREAKING: The White House says China is interested in buying more American oil while also agreeing with the U.S. that Iran can never have a nuclear weapon, per FOX

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THE FED TO PURCHASE $10 BILLION OF BILLS FOR RESERVE MANAGEMENT

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US VP Vance on Iran talks: Think we are making progress.

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US VP Vance on Iran: Focused on diplomatic pathway for now.

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BREAKING: Senate confirms Kevin Warsh as Fed chair.

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Chinese firms have been discussing arms sales to Iran - NYT

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Fed's Kashkari: Not sure Fed's policy rate decisions will have much effect on mortgage rates.

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Fed's Kashkari: Inflation is too high.