Market Wrap: After trading without much conviction for most of the session, our benchmark FNMA 6.0% bond fell 25bp to close at $99.75 in the aftermath of the Fed's interest rate decision and policy statement. A sharp rally in the stock market stemming from the Fed's decision to keep interest rates on hold at 2% along with oil prices falling below $119/barrel helped pull money away from the bond market and into stocks. A key phrase in policy statement was 'the inflation outlook remains highly uncertain' and it appears the Fed is willing to keep interest rates on hold for now in favor of economic growth over fighting inflation. It was surprising to see Philly Fed President and known inflation hawk Charles Plosser vote with the majority to keep interest rates on hold while another hawk, Dallas Fed President Richard Fisher, voted for a rate hike. Regardless, the stock market was pleased with the outcome while the bond market was hit with a wave of late session selling. The major indices rocketed higher with the Dow gaining 331 points to close at 11,615 while the NASDAQ Composite Index jumped 64 points to close at 2,349. The broader S&P 500 Index shot 35 points higher to close at 1,284.

Market Wrap: Both the stock and bond markets got off to a rough start today after Freddie Mac reported 2nd Qtr. losses that were over three times higher than expected. Our benchmark FNMA 6.0% bond ended the session 25bp lower to close at $99.50 but had traded down by as much as 63bp before rallying off of its intraday low. Better than expected results from a $17 billion 10-yr Treasury note auction allowed the bond to bounce back. A prior new auction of 10-yr notes saw a foreign participation level of 28.4% while today's had a better level of 34%. Meanwhile, stocks rebounded from their session lows following the Energy Information Administration's (EIA) weekly report on petroleum inventories. The EIA report showed crude oil inventory rising by 1.7 million barrels vs. expectations of a 1.2 million barrel increase while distillate fuel inventories rose by 2.8 million barrels vs. expectations of 2.3 million barrels. The higher inventory levels prompted a retreat in oil prices to about $118/barrel and this provided a boost for the stock market with the major indices trading modestly higher. The Dow ended 40 points higher to close at 11,656 while the NASDAQ Composite Index gained 28 points to close at 2,378. The broader S&P 500 Index gained 4 points to close at 1,289.

Market Wrap: The latest inflation data from the Personal Income and Spending Report for June was UGLY with overall PCE inflation jumping by 0.8% for the month and 4.1% over the past year, the worst jolt in 27 years. The Core PCE inflation rate matched expectations at 0.3% leaving the year-over-year rate at 2.3% and above the Fed's target rate between 1-2%. To make matters a little worse, Personal Income was above forecasts at 0.1% vs. -0.1% while Personal Spending also came in a little high at 0.6% vs. a 0.5% consensus. Bonds sold off hard on the hot inflation news with our benchmark FNMA 6.0% bond plunging 44bp for a close at $100.00. The stock market didn't fare much better as energy, commodities, and materials stocks were sold on a sizeable drop in crude oil futures from a reduced threat to oil infrastructure in the Gulf of Mexico from Tropical Storm Edouard. Even if there is storm damage to refineries and oil platforms the oil market believes there will be less demand for oil and the price will continue to drop. The major indices again ended in negative territory with the Dow losing 42 points to close at 11,284 while the NASDAQ Composite Index lost 25 points to close at 2,285. The broader S&P 500 Index dropped 11 points to close at 1,249.