Fed Heads Follow Rebounding Manufacturing and Inflation Data

Equity futures point to a lower market open later this morning, while the 10-year Treasury yield and oil prices continue to move higher. Both climbed in response to yesterday’s better-than-expected March Manufacturing PMI data from the US and China, and this morning we can add similar findings for the UK to that list.  In the US, that improvement captured by both S&P Global and the Institute for Supply Management has the market once again questioning the start of potential rate cuts but also how many we could realistically see between now and the end of the year.  While manufacturing activity and new orders rebounded, so did inflation data from both research firms, and as we like to say, that is something that won’t go unnoticed by the Fed. 

While we have a modicum of economic data this morning, including February JOLTs data and Factory Orders, there is a bevy of Fed heads making the rounds, including John Williams, Loretta Mester, Mary Daly, and Michelle Bowman. Recently Atlanta Fed President Raphael Bostic shared he now expects just one quarter-point rate cut this year, and that was before yesterday’s data, figures that led the Atlanta GDPNow Model to be revised to +2.8% for the March quarter from 2.1%. We and the market will be listening to see if others follow Bostic’s line of thinking, hinting that one or two fewer rate cuts are likely in the coming months.  

Should that be the telegraphed message, following the picture-perfect rise over the last few months, an increasingly overbought and euphoric market, the increasingly talked about pullback could emerge.  For times like those, we have our Market Hedge model (see below) for more.

  • Health insurers, such as United Health (UNH) and CVS Health (CVS), are falling in premarket trading after the Centers for Medicare & Medicaid Services finalized the 2025 rate announcement for Medicare Advantage and prescription drug coverage. In 2025, payments from the government toward these plans are expected to rise 3.7% year over year, unchanged from an earlier proposed rate.

  • Shares of branded apparel company PVH (PVH) were hard hit in aftermarket trading last night following sharply lower EPS guidance of $2.15 versus the $2.58 market consnesus and the $3.72 reported for its January quarter. 

  • Citigroup (C) implemented a fresh round of job cuts in its US investment bank last week as part of a restructuring, according to people familiar with the matter. Technology, media, and telecom were among the coverage areas hit hardest as well as equity capital markets, debt capital markets, financial sponsor coverage, and clean technology banking.

  • Rubrik, a Microsoft (MSFT) backed cloud and data security startup, has filed for an initial public offering.

Related: Wealth Gap and the Road to Serfdom