Yields in the U.S. up 2bps, 2Y at 4.776% and 10Y at 4.04%. The overnight Chinese deflation in CPI (down 0.3% yoy in July) and PPI (-4.4%) didn't seem to have a major market impact. That said, the price of rice in Asia reportedly hit the highest level since 2008. In other news WeWork reported there is "substantial doubt" they'll be able to stay in business. This must have been completely surprising to absolutely no one (though their shares are down 17%) as I was under the impression they were already out of business. Rising commodity prices and labor strikes has raised some doubts in the minds of some pundits around the ability for inflation in the U.S. to continue to decelerate. NY Fed LSE out with a note on r-star, largely says long-run r-star is still low. On the day ahead there is NO economic data, just the much anticipated 10Y Treasury Auction.
TTOD: People say they are here but they really aren't, only 20bp above the most cuts priced into 2024. Still clean pristine beaches and no trouble getting dinner reservations at the hottest restaurants. Talk to me about crowded when cuts for 2024 are less than 100.
TTOD: Client note: "Good news is that a recession is unlikely. Bad news is that some large events of default are more likely. Will hit REITs, bonds and banks equally. CRE equity has gone up for 50 years on the assumption of refinance at a higher equity value" @petergrantwsj
TTOD: The Fed's favorite measure of "inflation compensation" (their term) is the 5-year/5-year inflation break-even rate. It shows the market's pricing of the average inflation rate in five years for the next five years (this supposedly removes short-term distortions like gyrations in crude oil and gasoline prices). It is again getting close to a new nine-year high.
TTOD: If you thought August was supposed to be the quiet part of summer when everyone was on vacation ....Below is a tick chart of the 10-year yield August 1 to August 4 (three days), up 26 basis points. (green) August 4 to August 7 (two trading days), down 22 basis points. (red) (If you are not a bond person ... these are big moves)
TTOD: I personally have been skeptical of AIRBNB causing a housing crash. What it could do though is crush the comps in a neighborhood. As I’ve said before: Banks wanna move their foreclosures. If they have to drop the price 20% to sell so be it. Here’s how it could happen:
TTOD: On Thursday the headline inflation measure will increase from 3.0% to something like 3.2%. The takeaways will be: (1) you should pay less attention to 12-month measures & (2) you should pay less attention to headline (which includes volatile food and energy).
TTOD: The entire economy is one giant Ponzi scheme. That meme about the guy digging the hole and 10 Americans in suits standing there is more true than ever.
TTOD: "The level of the problem is extreme." The spotted lantern fly has dominated public attention in the U.S. — but a different pest is killing trees and confounding scientists, and it has received precious little attention.
TTOD: Israeli officials expect 6,000 missiles/rockets to be fired from Lebanon in the first fews days of war, if another conflict erupts with Hezbollah. They also warn of widespread blackouts and hundreds of civilian fatalities. Tension remains high on Israel's northern border amid increased provocations from the Iranian-backed Lebanese militant group.
@dampedspring (Andy Constan), "People say they are here but they really aren't only 20bp above the most cuts priced into 2024. Still clean pristine beaches and no trouble getting dinner reservations at the hottest restaurants. Talk to me about crowded when cuts for 2024 are less than 100." Twitter, 8 Aug 2023 https://twitter.com/dampedspring/status/1689005683298144258?s=20
@rcwhalen (Richard Whalen), "Client note: "Good news is that a recession is unlikely. Bad news is that some large events of default are more likely. Will hit REITs, bonds and banks equally. CRE equity has gone up for 50 years on the assumption of refinance at a higher equity value" Twitter, 8 Aug 2023, https://twitter.com/rcwhalen/status/1688873317522915328?s=20
@biancoresearch (Jim Bianco), "The Fed's favorite measure of "inflation compensation" (their term) is the 5-year/5-year inflation break-even rate. It shows the market's pricing of the average inflation rate in five years for the next five years (this supposedly removes short-term distortions like gyrations in crude oil and gasoline prices). It is again getting close to a new nine-year high." Twitter 8 Aug 2023 https://twitter.com/biancoresearch/status/1688964157545005056?s=20
@biancoresearch (Jim Bianco), "If you thought August was supposed to be the quiet part of summer when everyone was on vacation ....Below is a tick chart of the 10-year yield August 1 to August 4 (three days), up 26 basis points. (green) August 4 to August 7 (two trading days), down 22 basis points. (red) (If you are not a bond person ... these are big moves)". Twitter, 8 Aug 2023, https://twitter.com/biancoresearch/status/1688904172584755200?s=20
@StealthQE4 (QE Infinity), "I personally have been skeptical of AIRBNB causing a housing crash. What it could do though is crush the comps in a neighborhood. As I’ve said before: Banks wanna move their foreclosures. If they have to drop the price 20% to sell so be it. Here’s how it could happen:". Twitter, 7 Aug 2023, https://twitter.com/StealthQE4/status/1688759381758820352?s=20
@jasonfurman (Jason Furman), "On Thursday the headline inflation measure will increase from 3.0% to something like 3.2%. The takeaways will be: (1) you should pay less attention to 12-month measures & (2) you should pay less attention to headline (which includes volatile food and energy)" Twitter, 8 Aug 2023, https://twitter.com/jasonfurman/status/1688994202225364992?s=20
@DonMiami3 (Don Johnson), "So we had one of the largest stock market rallies on plummeting y/y revenues across the board? Dotcom bubble? Try Dutch Tulips. The entire economy is one giant Ponzi scheme. That meme about the guy digging the hole and 10 Americans in suits standing there is more true than ever." Twitter, 8 Aug 2023, https://twitter.com/DonMiami3/status/1688880938665570304?s=20
@Yahoo, ""The level of the problem is extreme." The spotted lantern fly has dominated public attention in the U.S. — but a different pest is killing trees and confounding scientists, and it has received precious little attention.", Twitter, 8 Aug 2023, https://twitter.com/Yahoo/status/1689053394386776064?s=20
@TreyYingst (Trey Yingst), "Israeli officials expect 6,000 missiles/rockets to be fired from Lebanon in the first fews days of war, if another conflict erupts with Hezbollah. They also warn of widespread blackouts and hundreds of civilian fatalities. Tension remains high on Israel's northern border amid increased provocations from the Iranian-backed Lebanese militant group. https://israelhayom.com/2023/08/07/unprecedented-rocket-salvo-and-disruption-to-infrastructure-idf-predicts-what-hezbollah-flare-up-could-look-like/" Twitter, 8 Aug 2023, https://twitter.com/TreyYingst/status/1688952028544872454?s=20
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