{"id":60719,"date":"2022-04-06T08:54:13","date_gmt":"2022-04-06T12:54:13","guid":{"rendered":"https:\/\/www.t3live.com\/blog\/?p=60719"},"modified":"2022-04-06T08:54:13","modified_gmt":"2022-04-06T12:54:13","slug":"coffee-with-greta-fed-officials-spook-traders","status":"publish","type":"post","link":"https:\/\/blog.t3live.com\/2022\/04\/06\/coffee-with-greta-fed-officials-spook-traders\/","title":{"rendered":"Coffee With Greta: Fed Officials Spook Traders"},"content":{"rendered":"

Editor's Note:<\/strong> Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here<\/span><\/a><\/strong>.<\/p>\n

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DJIA Futures: <\/b>-226 (-0.7%)<\/span><\/p>\n

SPX Futures: <\/b>-41 (-0.9%)<\/span><\/p>\n

NASDAQ Futures: <\/b>-225 (-1.5%)<\/span><\/p>\n

Good morning friends!<\/span><\/p>\n

Futures are lower as traders have their focus on the Fed as the bank is set to release the minutes of its March meeting this afternoon.<\/span><\/p>\n

Let\u2019s get right to it!<\/span><\/p>\n

Fed Officials Spook Traders<\/strong><\/h2>\n

The market is gearing up for the release of the Fed\u2019s March meeting minutes at 2:00 p.m. ET.<\/span><\/p>\n

This comes after Fed Governor Lael Brainard and San Francisco Fed President Mary Daly made headlines with their hawkish comments on Tuesday.\u00a0<\/span><\/p>\n

Speaking at the Minneapolis Fed, Brainard said, \u201cinflation is much too high and is subject to upside risks\u201d.<\/span><\/p>\n

She said she expects the balance sheet reduction to be \u201crapid\u201d and begin as early as the May meeting.\u00a0<\/span><\/p>\n

Daly reiterated that inflation is far too high, saying \u201cinflation is as harmful as not having a job\u201d in a speech Tuesday afternoon.<\/span><\/p>\n

Those comments were specifically spooky for the market as both Brainard and Daly are typically dovish on monetary policy.<\/span><\/p>\n

The market is looking ahead to this afternoon\u2019s minutes to get more clarity on the Fed\u2019s plans for the immediate future.<\/span><\/p>\n

CME Groups <\/span>FedWatch<\/span><\/a> Tool shows 76.6% of traders expect a 0.5% rate hike at the May meeting.\u00a0<\/span><\/p>\n

10-Year Treasury Yield Spikes<\/strong><\/h2>\n

The yield on the 10-year Treasury note spiked to the highest level since March 2019 following Brainard\u2019s comments.\u00a0<\/span><\/p>\n

That yield hit a high of 2.67% this morning after topping out at 2.562% on Tuesday.<\/span><\/p>\n

That put the 2-year\/10-year Treasury yield curve back in positive territory after being inverted since last Thursday.<\/span><\/p>\n

The 2-year Treasury yield is at 2.55%.<\/span><\/p>\n

But the curve remains inverted between the 5-year and 30-year yields.\u00a0<\/span><\/p>\n

The 5-year yield is 2.76% while the 30-year yield is 2.66%.<\/span><\/p>\n

Mortgage Rates Spike, Demand Tumbles<\/strong><\/h2>\n

The spike in the 10-year yield also caused a spike in mortgage rates.\u00a0<\/span><\/p>\n

Mortgage News Daily shows the average 30-year contract mortgage rate standing at 5.02%.<\/span><\/p>\n

It\u2019s the first time rates have topped 5% since 2011.<\/span><\/p>\n

And those surging rates are pushing more buyers out of the market.\u00a0<\/span><\/p>\n

The Mortgage Bankers Association says total mortgage application volume fell 6% last week and was down 41% year-over-year.\u00a0<\/span><\/p>\n

Refinance applications plunged 10% weekly and 62% annually.\u00a0<\/span><\/p>\n

New purchase applications were down 3% weekly and 9% lower year-over-year.<\/span><\/p>\n

The average 30-year rate during that time rose to 4.90% from 4.80%, increasing for the fourth straight week.<\/span><\/p>\n

Oil Rises Ahead of New Russia Sanctions<\/strong><\/h2>\n

Oil prices are rising as the threat of new Russian sanctions outweighs demand concerns.\u00a0<\/span><\/p>\n

West Texas Intermediate crude futures are up 1.2% to over $103 per barrel while Brent crude futures are up 0.9% to over $107 per barrel.\u00a0<\/span><\/p>\n

NBC News reported the U.S. and its allies are set to impose new sanctions targeting Russian financial institutions, Kremlin officials, and their family members.\u00a0<\/span><\/p>\n

The sanctions package is in partnership with the EU and G7 member nations and will also ban new investment in Russia.\u00a0<\/span><\/p>\n

The EU sanctions would ban Russian coal imports and block Russian ships from entering EU ports.<\/span><\/p>\n

The actions come in response to new allegations of Moscow committing war crimes against civilians in northern Ukraine.<\/span><\/p>\n

Spirit to Consider JetBlue Buyout Offer<\/strong><\/h2>\n

Spirit Airlines <\/b>(SAVE) shares are down 2.8% ahead of the open following a $3.6 billion buyout offer from <\/span>JetBlue Airways <\/b>(JBLU).<\/span><\/p>\n

Spirit said its board will consider the takeover offer.<\/span><\/p>\n

SAVE shares originally soared after the New York Times report ahead of the close on Tuesday.\u00a0<\/span><\/p>\n

Trading was halted after shares spiked more than 22%.<\/span><\/p>\n

JetBlue offered Spirit $33 per share or $3.6 billion total in cash.\u00a0<\/span><\/p>\n

This offer is a 40% premium to Spirit\u2019s planned cash and share merger with <\/span>Frontier Group <\/b>(ULCC).<\/span><\/p>\n

Spirit said the board will \u201cpursue the course of action it determines to be in the best interests of Spirit and its stockholders.\u201d<\/span><\/p>\n

JBLU shares are down 4.6% in premarket trade.<\/span><\/p>\n

Tilray Jumps on Surprise Profit<\/strong><\/h2>\n

Tilray <\/b>(TLRY) shares are up 8% ahead of the open after reporting an unexpected Q3 profit.<\/span><\/p>\n

The company reported earnings of $0.09 per share on $151.9 million in revenue.\u00a0<\/span><\/p>\n

That profit beat analysts\u2019 expectations for a loss of $0.08 per share but revenue was shy of the $156.2 million estimate.\u00a0<\/span><\/p>\n

Tilray reaffirmed its revenue guidance and said it is on track to achieve $4 billion in revenue by the end of fiscal 2024.\u00a0<\/span><\/p>\n

In Case You Missed It<\/strong><\/h2>\n