The Profit Margin: April 4, 2022

Statistic of the Week

A recent survey found that the average NYC office employee who worked from home during the pandemic plans on reducing their time in the office by 49% when they return. Nationally, New York City is second to San Francisco in the reduction of hours spent “in office” since the pandemic began.

Global Perspective

The Rhine River is a central pathway for commerce across Germany. For the first time in 15 years, the level of the river dropped below one meter; at this time of year, it usually has an average depth of two meters. Barge operators are concerned that should the river’s depth continue to decline, the river will become too narrow navigate.

Market Moving Events

Monday: Factory Orders Tuesday: ISM Services Index Wednesday: FOMC Meeting Minutes Thursday: Jobless Claims

Commentary

It was a mixed week on Wall Street as investors grappled with inflation data, an update on the employment situation, and the continued war in Ukraine. The DJIA fell -0.12% for the week.1 The S&P 500 was virtually flat, up 0.06%,2 and the Nasdaq rose 0.65.%.3 Treasury yields fell. The 10-year Treasury yield dipped -0.12% to close Friday at 2.37%.4 While the jobs figure for March (chart right) was slightly weaker-than-expected,5 wages were up 5.6% year over year.6 There is little doubt that the employment situation remains exceptionally strong. We expect to hear continued commentary about the state of the yield curve and the potential for a sustained “inversion.” A yield curve inversion occurs when shorter-term fixed Treasuries have a higher yield than longer-term Treasuries. This happened briefly on Friday when the 2-year Treasury had a yield of 2.44% and the 10-year Treasury had a yield of 2.38%.7 Historically, yield curve inversions have been a necessary, but not sufficient, indicator of a future recession. It is not a cause for panic as headlines would lead investors to believe. With inflation remaining high (the Fed’s favorite inflation gauge, the PCE, was up 6.4% year-over-year in February, a 40-year high),8 futures markets are pricing in swifter, more aggressive Fed action. Wednesday’s release of meeting minutes could be a market moving event. – Dan McElwee, CFP, ® MBA

Chart of the Week

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Sources

Statistic of the Week:
Businessweek

Global Perspective:
Bloomberg Opinion

Market Moving Events:
MarketWatch.com

Chart of the Week:
Haver, Clearnomics, Bureau of Labor Statistics

Commentary:1.Bloomberg2.Bloomberg3.Bloomberg4.Bloomberg5.Bureau of Labor Statistics6.Bureau of Labor Statistics7. Barron’s8. Investor’s Business Daily