After the awful 2 yr note auction yesterday, today’s 5 yr was merely weak. The yield of 2.997% was slightly above the when issued pricing. The bid to cover of 2.39 was below the one year average of 2.49. Also reflecting soft demand, direct and indirect bidders took 67% of the auction, matching the least since December 2017 and thus leaving dealers the most since …
Confidence
The September Conference Board consumer confidence index was 138.4, well above the estimate of 132.1 and up from 134.7 last month. This level of confidence is the highest since September 2000 and was mostly driven by a rise in the Expectations component as Present Situation was little changed. Contributing to the enthusiasm was the 3.4 pt increase in the Jobs are …
We’re there
We're there, 3.11% in the 10 yr Treasury yield. Not only that, the 5 yr is at 2.99%. Again, 3.11% was the high close for the year touched on May 17th. Any close above that would be the highest since July 2011. Big moment. Bankrate.com last night said its average 30 yr mortgage rate was at 4.66%, one bp from the highest since May 2011. The selling today in bonds is …
A crappy auction
A 10 yr high in what a 2 yr US Treasury note yields was no attraction at all in the auction that just occurred. The yield of 2.829% was a touch above the when issued. The bid to cover of 2.44 was very weak, well below the one year average high of 2.81. That matches the worst bid to cover since December 2008. Also reflecting weak demand, dealers got stuck with 47% of …
Dallas manufacturing and some comments
The September Dallas manufacturing index fell almost 3 pts m/o/m to 28.1. The estimate was for no change. While the headline move lower was modest, the internals reflected more moderation. New orders fell to 14.7 from 23.9. Backlogs dropped to just 1.8 from 9.1. Production fell 6 pts. Employment was lower by 11 pts and hours worked dropped by 6.3 pts. Capital spending …
Interest rates
It was these comments that sent European bond yields to the high of the day and the German 10 yr yield to .50% for the first time since May, up 4 bps today: Mario Draghi said that there is a “relatively vigorous” rise in underlying inflation in the Eurozone. “Underlying inflation is expected to increase further over the coming months as the tightening labor market is …
A 2019 event I guess, shifting focus
Well I guess any hopes for a trade deal between the US and China won't happen anytime soon and is more likely a 2019 event which means those 10% taxes on the latest tranche on China that kicks in today will become 25% by year end. China's stock market was closed overnight so the only response seen was in the H shares in Hong Kong which closed lower by 1.8%. The Hang …
Succinct Summation of the Week’s Events – 9/21
Positives 1) A story with no detail and no comments but “two people familiar with the matter said” that China has plans to cut sometime next month the average tariff rate that it puts on many of its imports. 2) Initial jobless claims totaled 201k, 9k less than expected and down from 204k last week. This brings the 4 week average down to 206k from 208k last week. …
[Read more...] about Succinct Summation of the Week’s Events – 9/21
From subtle to stealth
While Asian stocks bounced nicely, particularly those in China, the other action of note was in Japanese bonds. What began as a subtle taper has now gone stealth. The BoJ today cut the amount of bonds they bought with maturities north of 25 years by 10b yen. The 40 yr yield that I like to watch jumped 5 bps to 1.05%. That's the highest since November. The 10 yr yield …
Existing home sales
Existing home sales in August totaled 5.34mm annualized, 30k less than expected and that level is unchanged from July. Home prices rose 4.6% and is below 5% for the 3rd straight month which I believe is a welcome retreat for would be home buyers. Months’ supply was unchanged at 4.3. Those first time buyers made up 31% of total purchases which is about in line with …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.