U.S. yields continue their march higher with the 10Y crossing 4.30%, a YTD high, and the 30Y hitting a decade high of 4.42%. I'm sure you're familiar with "Post-Keynesian economics" right? My lay understanding (courtesy of Alex Williams blog) is that expectations play a major role in this school of thought. Expected demand, drives investment, which drives employment, which leads to wage increases, which allows workers to buy the products being produced which creates a virtuous cycle, one in which demand creates supply by driving investment without curtailing current consumption. "A boom begets a boom". Obviously there are sectors in the economy not doing well with higher rates, but at least for now it looks like consumption is hanging in there, just look at Walmart earnings today.
As we get closer to J-Hole be prepared to hear more and more about R-Star estimates. There was a Reuters article here and a St. Louis Fed post trying to grasp what is a restrictive Fed Funds rate.
On the day ahead, jobless claims, Philly Fed.
TTOD: Another day, another upward revision over at the Atlanta Fed’s GDPNow..this is good for the US economy in much the same way that fentanyl is good for one’s well-being. I’ve never taken that particular drug, but I imagine that it makes one feel good—for a while...So what’s wrong with 5.8% RGDP growth? Nothing, as long as NGDP growth is below 5%. But let’s be real; if RGDP comes in at 5.8%, then NGDP growth (which is what matters) will be 8% or 9%. And that would increase the risk of recession in 2024......On the other hand, Bloomberg says there’s a 100% chance of recession by October, so perhaps the Atlanta Fed is wrong......So this growth (if it happens) would be the lagged effect of exactly what?
TTOD: The Fed went on one of the most aggressive rate-hiking cycles in history It's been 18 months yet the unemployment rate hasn't budged, GDP growth is accelerating & housing prices didn't crash Can we just admit that no one really understands how the US economy works?
TTOD: I would guess that these higher long-term rates are with us to stay — and if I had to bet, I think I bet that they’re more likely to go higher, than to go lower.
TTOD: Either a major productivity boom is unfolding right before our eyes or the economy is running too hot. Here's hoping for the former!
TTOD: Would there be demand for a hedge fund with 8-year lockups that doesn't send out monthly statements?
TTOD: Saudi Arabia’s stockpile of US Treasuries has fallen 41% since early 2020, to the lowest level in more than six years. China sold $11.3 billion of the debt in June to bring its holdings of US Treasuries to the lowest level since mid-2009.
TTOD: Do not throw away perfectly good food: 1. Put leftovers in Tupperware 2. Place Tupperware in fridge 3. Let it go bad 4. Then throw it away
TTOD: The world record for the longest pee of 508 seconds, lasting nearly 8.5 minutes, was achieved by a man named Andrew Stanton in 2018. This remarkable feat took place in the United Kingdom. While this may seem like an unusual record, it's important to note that records like this can sometimes be a result of unique circumstances or physiological variations.
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