Elections came into focus with Macron dissolving parliament and calling for snap elections after strong showings by far right candidates in parliamentary elections swept parts of Europe. The Euro sold off some, but the U.S. is the honey badger don't care economy with equity indexes hit new highs. Something, something AI, Apple, meme's, you get the gist.
The 3Y auction tailed 1.1bps, but bond yields did little ahead of Wednesday's FOMC. 2Y is 4.89% and 10Y is 4.47%
I think I'm willing to bet that the Hurley decision to stay at UCONN is more important than the FOMC this week. Maybe that's just a belief that the head coach of 5 guys on the court's policies are more directly transmitted than the guy at the Fed who sets a rate and needs it to transmit through a gigantic and complex economy...and something about long and variable lags probably doesn't work in sports.
In other Fed news, the NY Fed SCE seemed to indicate consumers fell pretty good and are not lowering their inflation expectations, in fact their 5 year inflation expectations increased to 3%.
On the day ahead it's small biz optimism (the commentary in that report is actually usually solid) and the 10Y auction as highlights.
XTOD: Not encouraging for the Fed: New York Fed 5-year inflation expectations ticked up to 3% from 2.8%. UMich longer-term inflation expectations have also climbed a bit lately. Probably not enough to make officials freak out, but definitely something that they'll be keeping an eye on.
XTOD: With these European election results smashing the liberal left, it appears that rampant illegal immigration and inflation are a toxic mix. Get ready for November.
XTOD: $20,000 a box? Spot rates on Asia-Europe ready to eclipse pandemic highs https://splash247.com/?p=207893
XTOD: Two huge and powerful forces are pushing for further globalization:
1) A flawed US corporate tax code that encourages offshoring (see US pharma imports)
2) China's domestic economic weakness, which has pushed it rely on exports
XTOD: Don’t mistake burnout for laziness. When people show a steady decline in effort and output, it’s often a sign of exhaustion. They don't need carrots and sticks to motivate them. They need people to demand less of them and provide more support to them.
XTOD: "Wonder is the desire for knowledge."
https://x.com/jeannasmialek/status/1800182237985472886
https://x.com/Jkylebass/status/1799894848733933890
https://x.com/mercoglianos/status/1800182854317690949
https://x.com/Brad_Setser/status/1799919441628766706
https://x.com/AdamMGrant/status/1800215043059114027
https://x.com/ClassicalAegis/status/1799750109259075722
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