Initial jobless claims totaled 221k, 4k less than expected and down from 230k last week (revised up by 1k). This brings the 4 week average to 225k, up 1k because a 217k print falls out of the average. Continuing claims, delayed by a week, fell by 27k after rising by 19k last week. Bottom line, the pace of firing’s are modest but I remain of the belief that we’ve seen …
A shift in focus?
When I sent my Fed note yesterday at 2:24pm, this was the last line: "As for the stock market, it keeps ignoring why the Fed is ending this rate hike cycle with a fed funds rate of only 2.25-2.5% and a balance sheet that will end up still near $4 Trillion." The question now before the house after the close is whether we just saw a classic sell on the news after the …
Banks and the yield curve
In response to the Fed statement and plans, the yield curve continues to invert on the shorter end. The 1 yr/5 yr is now inverted by 12.5 bps, up from 7 bps yesterday. It’s approaching the 14 bps inverted in early January. It helps to explain why the BKX bank index is down 1.6% in response. 1 yr/5 yr yield spread …
And the Fed says…
Before the statement hit the tape, the December fed funds futures was yielding 2.33% vs the effective fed funds rate of 2.40%, thus pricing in small odds of a cut. Most of the Fed is following about what the market has priced in as 11 dots are voting for no hike this year (4 say hike once, 2 say twice) while there is expectations of one next year (mean fed funds rate …
Tariffs
BN: *TRUMP SAYS TARIFFS WILL STAY ON UNTIL CHINA COMPLIES WITH DEAL Not what we wanted to hear. …
Fed day/What FDX said/Other good stuff
By tying their mast to the S&P 500 by way of focusing on the state of financial conditions, the Fed is in a very strange place right now. They backed off from tightening early this year because the market drop scared them into believing markets knew something about the economic outlook. Well, now we have the S&P 500 within a few percent of record highs and …
US/China story
From Bloomberg news on why market just pulled back: "Some U.S. officials are concerned that China is pushing back against American demands in trade talks as progress slows toward a deal that could give President Donald Trump a boost for his 2020 reelection bid, according to people familiar with the talks. Chinese negotiators have shifted their stance with the …
More reason for move in bonds/Don’t ignore lack of SALT
You've heard it here, you've heard it there, you've heard it everywhere. What's the bond market saying about the US economy and why does the stock market think otherwise. Or you may say the bond market is just responding to the Fed blinking and prematurely ending their rate hike cycle and ending QT earlier rather than sooner. Or yields are falling because bond …
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Home builder sentiment
The NAHB home builder index for March held at 62. The estimate was 63. It’s multi year low was 56 in December and was 68 back in October. The components were mixed. Both Present Conditions and Future Expectations rose m/o/m but Prospective Buyers Traffic fell 4 pts and gave back its 4 pt gain in February. Prospective Buyers Traffic is now only 1 pt from matching the …
A few things
After finishing 2018 with only $1.6b of net foreign buying of US Treasury notes and bonds, foreigners sold $12b in January. It was back in 2011 and 2012 when foreigners bought more than $400b each of those years. China and Japan continued with their selling of notes and bonds but the pace of T-bill buying offset this which brought total holdings higher. Bottom line, …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.