This is coming to you early because I'm traveling today and will be away next week and not publishing. Putting aside what I think about the economy and what the Fed should do, I believe Jay Powell's commentary will adhere to his mid cycle adjustment theme in which he'll endorse a September rate cut but won't commit past that. He's already got a likely two …
[Read more...] about Succinct Summation of the Week’s Events – 8/23
The August Markit PMI’s disappointed as the manufacturing PMI slipped just below 50 at 49.9 down from 50.4 in July and the services PMI is getting close as it printed 50.9 vs 53 in the month prior. The composite index, combining the two, fell to 50.9 from 52.6. This is the first time since September 2009 that the manufacturing component has fallen below 50. Markit …
[Read more...] about US mfr’g slips below 50, services getting close
On the heels of Esther George’s comments after what Rosengren said, the odds of a 50 bps rate cut next month is down to just 6% vs 40% one week ago. Point being, if all things equal by the time the September meeting rolls around, if Powell is going to have another two dissents on a 25 bps cut, it will be real difficult to stretch for 50 bps. Neel Kashkari admitted …
Initial jobless claims totaled 209k, 7k less than expected and down from 221k last week. The 4 week average was up slightly to 215k from 214k though as a print of 207k dropped out. The story remains the same in that the pace of firing’s remains very low. In light of the economic moderation, manufacturers have cut hours, service hiring has moderated but no one is …
As a fiduciary of client money and/or a pontificator (is that a word?) on the macro world (I do both) it's particularly prudent to be watching one's back in the 10th year of an economic expansion. It's also important to be looking out for where the excesses lie in the era of extraordinary interest rate policy and as to when things begin to change. I can argue, I …
The Treasury market is now moving as they digest the minutes which I stated doesn’t reflect a committee that is intent on cutting aggressively from here, at least right now. Right before the release the 2 yr was at 1.54% vs 1.56% now. With the 10 yr yield at 1.57%, vs 1.55-.56% just prior, the spread of 1 bp is getting attention again. …
Bottom line as to why the Fed cut rates: 1)”while the overall outlook remained favorable, there had been signs of deceleration in economic activity in recent quarters, particularly in business fixed investment and manufacturing.” 2)”a policy easing at this meeting would be a prudent step from a risk-management perspective.” 3)”there were concerns about the …
Separately in the real estate market, the July Architecture Billings Index did get back to the 50 level at 50.1 from 49.1 in June. Multi family though is the only sector above 50 as commercial/industrial fell below 50, institutional was at 49.8 from 47 and those with a mixed practice dropped to 48.9 from 54.3. The chief economist of the AIA said “The data is not the …
July existing home sales, likely capturing contracts signed in the April thru June timeframe, totaled 5.42mm which is a touch above the estimate of 5.40mm and up from 5.29mm in June which was revised up by 20k. Smoothing out the monthly variability puts the 3 month average at 5.36mm vs the 6 month average of 5.33mm and the 12 month average of 5.24mm. Thus, lower rates …
Was this the first sign that investors are saying enough is enough? I don't know yet but Germany basically had a failed auction today when trying to sell 30 yr bunds. They sold 824mm euros at a yield of -.11% vs their plan to sell 2b euros worth. The bid to cover of 1.05 was the lowest since May 2018. In response, the 30 yr bund yield is rising by 5.5 bps to -.12%, …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.
