U.S yields start the day largely mixed with the curve slightly steeper. The 2Y is down ~1bp to 5.05% and the 10Y, relatively flat around 4.31% . The OECD was out with their interim economic outlook in which they provide: "A key risk is that inflation could continue to prove more persistent than expected, which would mean interest rates need to tighten further or remain higher for longer." Oil remains a focus as markets ponder the feed through of sustained oil price increases into higher energy inputs to power goods and services and therefore into core inflation. The bizarre flash crash in Treasuries early yesterday morning and the story of the missing F-35 made for fun headlines. Yellen was out yesterday talking about the economy and seemed to describe the job market as cooling some but indicated a higher for longer view.
On the day ahead we have Housing Starts and Building Permits as well as the 20Y Treasury bond auction.
XTOD: Nothing to see here. We should probably get back to looking for that missing F-35B bomber that flew away without its pilot.
XTOD: Almost every hard landing looks at first like a soft landing What's standing in the way of a soft landing now: -The Fed staying too high for too long -A too-hot economy -A rise in oil prices -A financial market rupture
"Planes land. Economies don't." https://wsj.com/economy/central-banking/why-a-soft-landing-could-prove-elusive-3d17e134?mod=hp_lead_pos1
XTOD: Economists and investors are diverging on how they see future Fed policy. Markets are implying the Fed is done with rate hikes. But almost half of economists surveyed by the FT think the Fed will raise rates twice or more from where we are now.
XTOD: My favorite FinTwit bio archetype is the “ex- hedge fund CIO.” Because you know there’s a story there…
XTOD: The Pentagon: We lost $2.3 Trillion The White House: We lost $6.2 Billion The Marines: We lost an F-35 fighter jet The IRS: If you venmo your friend $600 we are going to audit the shit out of you
XTOD: The conversation below between Janet Yellen and Hillary Clinton praises the Biden administration for its embrace of what Yellen calls “modern” supply side economics, which calls for expanded government involvement in directing financial investment toward its favored projects. This is the ultimate “trickle-down” approach, substituting bureaucratic dictate for free market innovation. It empowers and funds the growth of government at the expense of private enterprise. And meanwhile, the Fed fights the inflation unleashed by massive deficit funding of such projects by raising the cost of capital. This hurts private individuals who cannot afford higher mortgages, squeezes out small business and penalizes all borrowers (except the government).
XTOD: This idiot Peterson doesn't know that he doesn't know a thing about finance. Vanguard, Blackrock & ALL others (including YOUR own retirement funds) by virtue of INDEXING, will own stuff blindly stocks across market indices. Of course Pfizer, J&J, etc. since they are large caps!
https://x.com/lisaabramowicz1/status/1703656284224909759?s=20
https://x.com/StevenKelly49/status/1703859669012242714?s=20
https://x.com/Stephen_Geiger/status/1703840691128832211?s=20
https://x.com/judyshel/status/1704052020737654908?s=20
https://x.com/nntaleb/status/1703421716892893319?s=20
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