Softer than expected CPI readings fueled the "everything rally" yesterday. Big move lower in yields with the 2Y down 20bps and 10Y down 18bps. Equities had their best day since the spring with S&P up nearly 2%. Deficits and downgrades are shrugged off for another day and there is some optimism on Govt shutdown front and maybe optimism on the fentanyl front (optimism the flow will slow due to Biden-Xi deal, not optimism because investors are using fentanyl). We also moved closer to kicking the can on the government shutdown out another couple of months into 2024 as the House passed a CR last evening.
This morning, yields are up 3-4bps with the 2Y at 4.85% and 10Y at 4.47%. Across the pond, UK inflation came in below expectation at 4.6% annualized, well below the 6.7% it posted last month. With respect to inflation, in an interview from Mexico, Jamie Dimon indicated he didn't believe we can declare victory against inflation quite yet.
On the day ahead we'll see if Retail Sales data and PPI data can keep the everything rally alive.
XTOD: A great number. Pay particular attention to the 6-month trend, which Powell had emphasized was stuck throughout 2022. At the beginning of this year, the 6-month core CPI reading was 5.3 percent; it's now 3.2 percent, even as the economy added 1.9 million jobs
XTOD: Remember all those charts that show how missing the best 10 trading days in the market will cause your performance to be cut in half? Today is one of those days...
XTOD: 'Inflation is out of control. Have you been to the grocery store lately?!' he complained as he climbed into his $80k truck after taking a 2 week vacation to Europe
XTOD: New potential rules for FHLBs will likely kill the Fed funds market and hasten the move to SOFR. FHLBs will have less cash to invest, and be encouraged to invest in deposit accounts rather than fed funds. There will also be slight rewiring of funding mkts
XTOD: Lawmakers grill FDIC chief after sexual harassment report http://reut.rs/47rPEjb
XTOD: THREAD. The fear that AI will cause mass unemployment is rooted in a zero-sum mentality that fundamentally misunderstands how economies evolve. That fear is pervasive. It is misplaced.... Much of the concern about technological advances eliminating the need for human workers is rooted in a zero-sum mentality that fundamentally misunderstands how economies evolve.....Yes, new technologies will be able to perform some tasks relatively better & at lower cost than humans. Yes, this will lead businesses to use technology, not workers, for those tasks. But the process of creative destruction creates as well as destroys.....This is not just a theory. Despite rapid technological advances over the past five decades, it has not become more difficult for workers to find jobs. There has not been an upward trend in the unemployment rate....Looking ahead to the next several decades, my main concern is not too many workers, but too few. Falling fertility rates and rapid population aging will reduce the rate of workforce growth in the United States and across much of the developed world......A world in which AI eventually replaces all human workers would look a lot different from ours. While one of today’s fundamental economic problems is how to make the best use of scarce resources, that possible future is one of abundance... In this world, technology meets all our needs and inequality as we currently understand it no longer exists. Why accumulate wealth in a world of abundance?...On the other hand, such a world could also exacerbate inequality, particularly if a relatively small number of people own the machines that are generating all the income.
XTOD: Aiming for the best is a recipe for misery. The problem isn't high standards—it's always looking for better alternatives. There's no such thing as a best job or best apartment. There's only a good fit for you. A key to happiness is accepting options that meet your standards.
https://x.com/mtkonczal/status/1724428013431914754?s=20
https://x.com/Rick_Ferri/status/1724458752873574864?s=20
https://x.com/FedGuy12/status/1724096611884945554?s=20
https://x.com/Reuters/status/1724504294391464090?s=20
https://x.com/MichaelRStrain/status/1724471610705403965?s=20
https://x.com/AdamMGrant/status/1724087310772302300?s=20
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