Daily Economic Update: September 26, 2023

Yield curve bear steepening continues as the 2's10's curve is down to 60bps inverted with the 2Y at 5.12% and the 10Y at 4.51%. The dollar bull run continues as Yen hits YTD weakness against he dollar.  Yields continue to weigh on stocks. Jamie Dimon warning that the U.S. economy can't handle 7% yields and that any move higher in yields from here is going to be more painful then moving from 3% to 5%.
Fed officials give no signs of capitulating as Kashkari and Goolsbee both cited inflation being the biggest risk the Fed currently faces. The Government shutdown watch continues as Moody's warns a shutdown could lead to a loss of their Aaa rating (Fitch and S&P both have previously downgraded U.S. debt).  We'll see how markets digest the 2Y note auction today.  Also on the slate are consumer confidence data, sales of new homes and Richmond Fed business activity.

If shutdowns, strikes and student loan payments aren’t enough, add the “child care cliff” to the list.

XTOD: from Deutsche Bank --  10-year Treasury yields have averaged 4.5% in 233 years of data we're back to normal baybee

XTOD: "What's common throughout crises is that systemic crises are crises of 'money'—a breakdown in something functioning as money."

XTOD: As a curve trader (mostly), I tend to view UST price action through that prism, but this isn't about leveraged curve guys.   This is real money dumping duration.  Duration risk is BACK

XTOD: Spent some time thinking about bonds today.

* Price action is miserable. 1 out of 10.

* Blew through all technical levels.

* Impervious to bullish data.

* Have not yet reached climactic selling.

* Fundamentals of issuance and inflation persist

Probably what is need is a "shock" payroll or CPI number.  Or else sentiment becomes so one-sided that there is no one left to sell.  Either way, probably a bit more downside.

XTOD: As of Sept. 22, the daily trade-weighted U.S. dollar index was measuring 117.2, the highest level since mid-March (January 2006=100). Track the trend using FRED

XTOD: Sen. Menendez says at press conference implies cash  seized at his home was withdrawn over 30 years "from my personal savings account, which I have kept for emergencies and because of the history of my family facing confiscation in Cuba."

XTOD: Bob Menendez had $480,000 of cash in his closet. He could have been earning $26,400 per year risk free with T-Bills at 5.5%.   Lesson: Bob needs to fire his financial advisor.

XTOD: Four engineers get into a car. The car won’t start.    

Mechanical engineer: it’s a broken starter.   

Electrical engineer: dead battery.  

Chemical engineer: impurities in the gasoline.   

IT engineer: hey guys, I have an idea how about we all get out of the car and get back in.

XTOD: It’s been over a year since Kim Kardashian announced her private equity firm through a massive PR campaign and there are still zero deal announcements

https://x.com/kgreifeld/status/1706284074745073733?s=20
https://x.com/YPFSatYale/status/1706386267208823276?s=20
https://x.com/Fullcarry/status/1706383010717638886?s=20
https://x.com/dailydirtnap/status/1706371404277461100?s=20
https://x.com/stlouisfed/status/1706428438423191713?s=20
https://x.com/alexanderbolton/status/1706332185416843727?s=20
https://x.com/cullenroche/status/1706371692032037124?s=20
https://x.com/engineers_feed/status/1705990941822103816?s=20

https://x.com/litcapital/status/1706305335059706055?s=20