Yields are down again to start the day, with the 2Y down 3bps to 4.81% and the 10Y down 5bps to 4.40%. This morning's retail sales data in UK also shows signs of a slowing economy.
U.S. yields fell solidly yesterday as jobless claims data was interpreted as showing a cooling in labor markets and oil prices hitting their lowest level since mid-July. The move lower in yields was despite Cleveland Fed's Mester seeming to stress the longer part of "higher for longer" and Fed's Cook also acknowledging upside to inflation risk despite deeming the risk more two-sided at present. But seriously why listen to a Fed official when Walmart's CEO predicted the possibility of deflation in some food and goods categories in the months to come.
Atlanta Fed GDP now is currently at 2.2% for 4Q2023 (a 2 handle GDP ordinarily would would be a number most people would be happy with, but clearly down from last quarter). We'll get update on both GDPNow and the NY Fed's GDP nowcast today. On the day ahead it's light on data with just housing starts, but we'll get more fedspeak to close out the week.
XTOD: In consecutive days Walmart and Home Depot say the worst of the inflation is behind us. Walmart CEO is actually talking about deflation in the months ahead!
XTOD: I don’t think we need to look to look for a smoking gun in distorted seasonal to explain the drift up in continuing claims imho, labor demand is cooling, hiring narrowing, unemployment spells lengthening & UR drifting higher—risks to the outlook are two sided
XTOD: Soft landing is absolutely the consensus view
XTOD: Update on the R-Star Wars: divergence, big time. https://pbs.twimg.com/media/F_ESXzKXwAAmUhw?format=jpg&name=900x900
XTOD: It’s Economic Forces Day. Today, I think about how to describe what central banks do and why a recent speech by a Fed president seems to open the door to fiscal dominance, albeit unintentionally. https://t.co/yaN5MsCyLO
XTOD: NEW STORY: How far have prices for the F1 Las Vegas Grand Prix cratered? I booked a room at the Flamingo with a central location along the track for $18 on Wednesday before the race's opening ceremony. My dispatch from the most miscalculated event ever.
XTOD: TikTok is removing videos on its platform that promote Osama bin Laden’s letter justifying the September 11 attacks against the US
XTOD: There's an idea out there that physical currency is essential to anchor the money supply (bank deposits) & that if currency disappears, a CBDC will be needed to take its place. The
@RiksbankRes a major proponent of this view. This idea seems wrong to me. First, even if physical cash disappears, banks will still use reserves (essentially, wholesale CBDC) to clear and settle interbank payments. These reserves would continue to trade at par with deposits. Second, bank deposits are insured (up to $250K). There's no point in running a bank in this case. (And if cash was not available, it would be even more pointless to run.) Third, banks could continue to transform deposits into cash on demand and at par even if the demand for cash in the economy falls to zero. What is the problem here?
XTOD: five narratives
1. RWAs
2. DePIN
3. web3 social
4. AI
5. zk-everything
XTOD: “If it won’t matter in 5 YEARS don’t give it more than 5 MINUTES attention.”
https://x.com/cullenroche/status/1725152556891226322?s=20
https://x.com/jc_econ/status/1725148315116077469?s=20
https://x.com/BobEUnlimited/status/1725150294303019398?s=20
https://x.com/RebelEconProf/status/1725217845846360288?s=20
https://x.com/ArashMarkazi/status/1725201956011118985?s=20
https://x.com/business/status/1725231690472194534?s=20
https://x.com/dandolfa/status/1725237379273810095?s=20
https://x.com/Melt_Dem/status/1725248015705821272?s=20
https://x.com/tyromper/status/1724766049244209541?s=20
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