Fixed Income Yields Rising - Earnings: RY, TD, BMO, NA, CM, BMO

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Recent economic data is sending conflicting signals. Strong labour stats have been tempered by slowing GDP and lower-than-expected energy prices while inflation barely slows. The next series of central bank interest rate hikes, if deemed necessary, could prove challenging for markets. Central banks have been raising rates for close to one year and markets have been struggling. The narrowing trading range over the past three months is the market reaction to the mixed signals.

More market-moving economic data is due over the next two weeks beginning Tuesday when Federal Reserve Chair J. Powell provides a two-day semi-annual monetary policy statement to Washington legislators. Next comes the February jobs report on Friday, and the big one is the consumer-price index on the following Tuesday. Hot reports for any of these will keep the markets on edge. Then on Wednesday, March 22, the Fed will give its interest rate policy decision.

The most recent inflection point for interest rates moving up enough to impact markets has been when the US 10-year bond breaks 4% on the upside. The US 10-year bond yield is currently 3.96% and could be heading higher in the short term. This is an increase of 70 basis points since February-2023. Comments this week cover how the market could potentially react to further increases in bond yields, and the similarity this would have with the 2008 time frame.

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