September 11th starts with yields up and steeper the 2Y is 4.99% and 10Y is up ~4bps to 4.294%. The Yen is stronger against the USD as over the weekend Ueda said Japan may eventually end NIRP (negative interest rate policy) with the 2% inflation target in sight. It will be an important week in economic data heading into next week's FOMC decision as we get CPI on Wednesday, Retail Sales on Thursday, and another look at consumer expectations for inflation with UofM survey on Friday. Speaking of central banks, the ECB decision on Thursday will likely be of some interest given the continued inflationary pressures against continued weakness in areas like German manufacturing, as the European Commission cut the Euro Area growth forecast for remainder of 2023 and 2024 with contraction in Germany.
Staying in the states, there are some pretty big disconnects in GDP forecasting amongst Federal Reserve regional bank forecasters as Atlanta Fed's GDPNow is estimating real GDP at 5.6% for 3Q2023 and the newly reinstated NY Fed GDP nowcast at only 2.25%. The considerably better growth forecast have caused some commercial bank researchers to up their year end yield targets, with JPM now seeing 10Y yields ending the year at 4.20% up from 3.85% in their last forecast. Morgan Stanley on the other hand stated "We stand alone, with conviction, telling investors to buy government bonds, despite incessant selling, weak price action, driven by backward looking - and in our view - questionable narratives." Guess time will tell who is correct. Lots of talk of the Arm IPO this week, around the $55bln valuation threshold.
Tue: 10Y Note Auction
Wed: CPI, 30Y Bond Auction
Thu: ECB Decision, Jobless Claims, PPI, Retail Sales
Fri: Empire Mfg, Industrial Production and UofM
XTOD: NY Fed Q3 GDP Nowcast: +2.2% Atl Fed Q3 GDPNow: +5.6% Really smart move by Central Bankers here. You want to diversify your views in case one of these is way off the mark.
XTOD: Chicago Fed research: Fed rate increases have already taken substantial effect on output but the majority of effects have yet to occur for labor market The model says the Fed has done enough to bring inflation to target by 2024 while avoiding a recession https://chicagofed.org/publications/chicago-fed-letter/2023/483
XTOD: The only three variables that are too low in this late cycle are the only three that actually matter: - spreads - vol - ERP Everything else is levitating, rates, equities, house prices,… Usually liquidity ties it all together, not now
XTOD: @INArteCarloDoss has a great list of the reasons to be in cash. But the big kahuna which ties them all together is missing. Bond Term Premium is negative. All four need to go higher or the economy will continue to surprise on the upside. We think all four will go higher.
XTOD: New Fed Z.1 (which gives us early household wealth data) is out for the three months through June 2023. A big pop driven by stocks and real estate has pushed household (+nonprofit) net worth back above where it was before rate hikes started in 2022. https://federalreserve.gov/releases/z1/dataviz/z1/changes_in_net_worth/chart/
XTOD: Yes I agree, owning the index guarantees you own the winners, whoever that ends up being
XTOD: India is studying possible responses to a potential Chinese invasion of Taiwan after the US made discreet inquiries on how the nation could contribute in the event of a war, according to senior Indian government officials. The study, commissioned by India’s top military commander, will assess various war scenarios and provide options for the giant Asian country in case a conflict breaks out. Some Indian military commanders believe that strong statements may suffice as a response in case the war is short, but ultimately that will not be enough if the conflict drags on like Russia’s war in Ukraine, the officials said. Under Prime Minister Narendra Modi, India has developed a policy of “multi-alignment,” effectively hedging its bets by fostering close ties to the US while refusing to join international sanctions on Russia. That policy will be tested in the event of a drastic deterioration of US-China ties. via Bloomberg
XTOD: If markets are efficient, why are people still holding huge sums in bank accounts that yield 0.63% when money market funds pay 5.08%?
XTOD: Wow, there’s something that Lenin, Keynes, and Austrian economists all agree on: The best way to destroy society is to debase the currency. I'm genuinely curious what a Keynesian today thinks of these statements from Keynes in 1919.....haha imagine being an MMTer and knowing that Lenin, Keynes, and Austrians are all able to see/admit that debasing the currency destroys society. they prob spin this as motivation... "everyone is wrong except MMTers!!"
XTOD: Citigroup is tanking the way Credit Suisse did near the end.
XTOD: Crypto exchange FTX will likely get approval to liquidate its assets 13th of September. They had $3.4b worth of crypto in April. Current proposed plan is to sell up to $200m worth of crypto every week.
XTOD: Everything seems coordinated to hit in October 🤫 1) Student loan payments resume 2) Government budget shutdown October 2nd 3) Virus lockdowns 4) Bank failures 5) FEMA & FCC Nationwide Emergency Alert Test for October 4th
https://twitter.com/cullenroche/status/1700189767730905339?s=20
https://twitter.com/NickTimiraos/status/1699776157451776368?s=20
https://twitter.com/INArteCarloDoss/status/1700097745720091083?s=20
https://twitter.com/2GrayBeards/status/1700110967110017072?s=20
https://twitter.com/jeannasmialek/status/1700186208863731827?s=20
https://twitter.com/JoeMaule_/status/1699904780871557193?s=20
https://twitter.com/vtchakarova/status/1700109276880986612?s=20
https://twitter.com/JeffWeniger/status/1700240013567435090?s=20
https://twitter.com/john_at_swan/status/1700128725399224809?s=20
https://twitter.com/FinanceLancelot/status/1700175622050316769?s=20
https://twitter.com/WhaleChart/status/1700490945471414690?s=20
https://twitter.com/FinanceLancelot/status/1694106466838258145?s=20
No comments:
Post a Comment