IGA Capital Weekly Economic Brief
- Joshua Hawley
- Feb 11
- 3 min read
Joshua Hawley
February 11th, 2025
Market Overview: Key Economic Events & Trends
Last week’s January payroll data delivered a mixed labor market picture, with weaker-than-expected job growth in the establishment survey but stronger household survey figures. Nonfarm Payrolls increased by 143K jobs, falling short of the 175K consensus estimate, while December’s number was revised up from 256K to 307K.
Markets initially reacted to the higher-than-expected average hourly earnings growth, which raised concerns about inflation persistence. The key question remains whether the current 4.33% Effective Fed Funds rate is sufficiently restrictive to control inflation while maintaining a resilient labor market. This uncertainty reinforces the Federal Reserve’s decision to stay on hold for now.
Looking ahead, Fed Chairman Jerome Powell will deliver his semiannual monetary policy testimony to Congress on Tuesday and Wednesday, with markets closely watching for insights into the Fed’s rate outlook. The highlight of the week is Wednesday’s CPI report, with inflation expected to remain steady at 2.9% YoY. Additionally, Friday’s Retail Sales data will provide clues about consumer strength following strong November and December spending trends.
Key Economic Data This Week
This week’s focus is on inflation reports, Treasury auctions, and consumer demand:
Monday (Feb 10) – NY Fed Consumer Survey
Tuesday (Feb 11) – 3-Year Treasury Auction ($58B)
Wednesday (Feb 12) – CPI Report, 10-Year Treasury Auction ($42B), Fed Chair Powell Testimony
Thursday (Feb 13) – Jobless Claims, PPI (Producer Price Index), 30-Year Treasury Auction ($25B)
Friday (Feb 14) – Retail Sales, Import Prices, Capacity Utilization
Next week, markets will observe housing data (starts & permits) and consumer sentiment (University of Michigan). U.S. markets will be closed Monday for President’s Day.
Treasury Yields & Fixed Income Outlook
The Treasury market sold off Friday, as investors interpreted the mixed jobs report as reinforcing the Fed’s stance to keep rates on hold through 2024.
2-Year Treasury Yield: 4.29% (+9 bps)
10-Year Treasury Yield: 4.50% (-4 bps)
Yield Curve Spread (2s/10s): Flattened by 13 bps, now at 21 bps
The 10-year yield, which reached 4.62% in early January, has since retreated but remains over 100 bps higher than its September levels. The market is awaiting more clarity on U.S. economic resilience, fiscal policy, and geopolitical risks before any meaningful shift in long-term rates occurs.
Federal Reserve & Interest Rate Expectations
Following the employment report, markets are now pricing in the first rate cut in September 2024, with a second cut not expected until 2025.
Per Bloomberg, Minneapolis Fed President Neel Kashkari stated that inflation is expected to continue cooling toward the Fed’s 2% target, allowing for modest rate cuts by year-end. However, the Fed remains in a data-dependent mode, monitoring inflation trends, global trade risks (tariffs), and fiscal policy (taxes and spending).
Implied Fed Funds Rate Forecast
March 19 – 4.304%
May 7 – 4.256%
June 18 – 4.178%
July 30 – 4.128%
September 17 – 4.065%
December 10 (Final 2025 Meeting) – 3.971%
The Fed’s transparent approach to rate policy suggests that market volatility linked to Fed decisions will likely be lower than in previous years. Investors and businesses should remain focused on inflation dynamics and global economic trends as key drivers of capital costs and liquidity conditions.
Implications for Businesses & Investors
For businesses seeking capital, the higher-for-longer rate environment presents both challenges and opportunities. At IGA Capital, we specialize in structured finance solutions, helping clients navigate financing options in a dynamic macroeconomic landscape.
Corporate & Project Finance – Tailored debt and equity structures to support business expansion
Trade & Export Credit – Leveraging Export Credit Agencies (ECAs) to mitigate trade risks
Alternative Capital Solutions – Connecting businesses with private credit, institutional investors, and structured capital providers
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