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By Scott McIntyre, CFA
Co-Head of Investment Management
HilltopSecurities Asset Management
Bond yields are up today as investors view the prospect of higher energy prices as a reason for Fed officials to further delay future rate cuts. Saturday morning’s attack on Iran has resulted in a jump in crude oil with West Texas Intermediate (WTI) topping $73 per barrel briefly this morning before backing off. The last time WTI was this high was in July 2024. Typically, bond yields fall in response to significant military conflict as investors seek the “safe harbor” of the U.S. Treasuries. Today’s counterintuitive market move signals inflation is the more dominant concern.
January PCE and last week’s warmer than expected PPI report had already indicated the last mile of the inflation battle could be a slog. This morning, the results of the February ISM manufacturing survey added to those concerns as the prices paid index unexpectedly surged 11.5 points to 70.5. By comparison, the factory price index averaged 53.7 in 2024 and 63.4 in 2025. Any number in this series above 50 indicates a majority of purchasing managers are experiencing rising prices.
The overall report from the Institute of Supply Management was relatively favorable as the composite manufacturing index came in at 52.4, marking the first back-to-back expansion signals in a year. Although the new orders index slipped from 57.1 to 55.8, it was the highest consecutive two-month reading in four years. The employment index remained in contraction territory last month, but the 48.8 measure reached a 12-month high. Finding qualified factory workers is still a challenge, contributing to higher labor costs.
There’s quite a bit of data on the schedule this week highlighted by the February employment report and January retail sales, both on Friday, but tone and direction of the financial markets will likely be dictated by the evolving situation in the Middle East.
About Scott McIntyre, CFA
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Scott McIntyre specializes in investment management services and is responsible for the management, oversight and trade supervision of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Scott also provides investment advice and consulting, reviews local government investment policies, formulates overall investment strategies, evaluates account performance and oversees the day-to-day operations. He is a member of the Chartered Financial Analyst (CFA) Institute and a CFA Charterholder, a two-term advisor to the GFOA Treasury and Investment Management (TIM) committee, a Registered Investment Advisor, and holds FINRA Series 7, 24, 63, and 65 licenses.
About Greg Warner, CTP
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Greg Warner specializes in investment management services and is responsible for the management and oversight of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Greg coordinates all client services and portfolio management duties, including security evaluation and portfolio analysis, trading, investment reporting, board presentations, and monitoring of broker-dealer relationships. He is an advisory committee member to the Texas Association of Counties, a member of the Government Treasurers’ Organization of Texas (GTOT), a Registered Investment Advisor, a Certified Treasury Professional (CTP) and holds FINRA Series 7, 63, and 65 licenses.
About Matt Harris, CFA
As HilltopSecurities Asset Management’s Senior Portfolio Advisor, Matt Harris specializes in investment management services for public sector municipal clients. He developed his experience in the banking industry, supporting balance sheet management, interest rate risk analysis, liquidity planning, and investment strategy implementation. At HilltopSecurities, he works closely with clients to develop and implement customized investment strategies, oversees account documentation and reporting, and assists clients with the public funds depository review process, including competitive RFP evaluations. Harris is a member of the CFA Institute and a CFA Charterholder, a Registered Investment Advisor, and holds FINRA Series 7, 63, and 66 licenses.
The paper/commentary was prepared by HilltopSecurities (HTS). It is intended for informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained from sources that are believed to be reliable; however, it is not guaranteed to be correct, complete, or current, and is not intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances. The statements within constitute the views of HTS as of the date of the document and may differ from the views of other divisions/departments of Hilltop Securities Inc. and its affiliates. In addition, the views are subject to change without notice. This paper represents historical information only and is not an indication of future performance. This material has not been prepared in accordance with the guidelines or requirements to promote investment research, it is not a research report and is not intended as such. Sources available upon request.
Hilltop Securities Inc. is a registered broker-dealer, registered investment adviser and municipal advisor firm that does not provide tax or legal advice. HTS is a wholly owned subsidiary of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, Texas 75201, (214) 859-1800, 833-4HILLTOP.