Last week was significant in the financial world. The Federal Reserve held interest rates steady, aligning with expectations. However, they surprised us by signaling that a rate cut in March is unlikely, nudging the market upwards. The real shocker came on Friday with an unprecedented surge in rates, the largest in over a year, following the release of the non-farm payroll numbers, which were astonishingly higher than anticipated—353,000 compared to the forecasted 180,000. While some question the authenticity of these figures, citing various influencing factors, the reality is that this spike in rates spells trouble for the mid-term interest rate outlook.
The market now finds itself in a peculiar stance. With the economy showing robustness—steady inflation, strong job market, and growth in GDP—there’s little rationale for a decline in rates. This point is crucial for buyers currently on the fence.
Looking ahead, this week appears calm on the economic news front, with only a few speeches from Federal Reserve governors anticipated. These addresses are expected to shed more light on the Fed’s short-term rate strategy, though significant market movements are not anticipated.