As largely expected, the State of the Union Address (SOTU) was a non-event. Bloomberg writes “President Biden sought to breathe new life into his reelection match delivering a spirted and sharply political State of the Union Address that sparred with Republicans and targeted an opponent he did not even mention by name in perhaps one of the most partisan SOTU speeches ever.”
Over the years the Address has gravitated into a wish list of the Administration, a list of priorities that have a slim chance of becoming law. The tenants often forgotten about by the next news cycle.
There is debate the President would use the SOTU to demonstrate that he still has his cognitive abilities. Depending upon what side of the aisle one sits on, he either indicated that he does, or he does not.
Commenting on the second day of Powell’s congressional testimony, the Fed Chairman stated, “cuts can and will begin over the course of this year.” Powell further commented “when we do get that confidence [inflation moving sustainably at 2%] and were not far from it, it will be appropriate to begin to dial back the level of restriction.”
Two-year Treasury yields fell on this statement and the yield curve steepened.
Equites also advanced modestly.
At 8:30 February’s unemployment data is released. Analysts are estimating a 200k and 163k increase in non-farm and private sector payrolls, respectively, a 3.7% unemployment rate, a 0.2% increase in hourly earnings, a 34.3 average work week and a 62.6% labor participation rate.
The consistency of the past reports is surprises on the upside.
Last night the foreign markets were mixed. London was down 0.37%, Paris up 0.08% and Frankfurt down 0.17%. China was up 0.62%, Japan up 0.23% and Hang Seng up 0.76%.
Futures are down about 0.25% ahead of the data but this could change significantly if the 8:30 statistics differs considerably from the consensus view. The 10-year is up 3/32 to yield 4.07%.
