Blake Gwinn, the head of US Rates Strategy at RBC Capital Markets, joins Yahoo Finance's Morning Brief to explain why the possibility of a January interest rate cut could be dead, especially after December's jobs report flew past expectations and reported a gain of 256,000 nonfarm payroll jobs.
Gwinn points to strong seasonality trends seen in the first quarter in recent years, citing challenges for the Federal Reserve to justify cuts in the long run amid economic implications.
"If you look two years back, it led [Fed Chair Jerome] Powell to start talking about the potential for 50-basis-point hikes again. Last year, the Q1 seasonality saw us price out about 140, 150 basis points of rate cuts from December to April," Gwinn says. "If we get a repeat of that, I find it very hard to think that the Fed is going to be able to come back in two months, sitting on potentially two more months of hot data and deliver another cut. So I think they're done here."
Gwinn also discusses recent bond market reactions (^TYX, ^TNX, ^FVX), noting shifts in front-end yields amid this rate cut debate.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
This post was written by Josh Lynch