New home sales in March surprised to the upside with an annualized total of 694k vs the estimate of 630k and February was revised up by 50k to 667k. Regionally, the upside was all due to sales out West as they fell in the Northeast and Midwest and were little changed down South. As the number of homes for sale were unchanged, months’ supply fell to 5.2 from 5.4. The …
3% is not just a round number/European data continues to soften
With the 10 yr US Treasury yield, 3% is not just a round number. As seen in the chart, we peaked at 3.03% on December 31st, 2013 soon after touching exactly 3.0% in September 2013. Exceeding 3.03% would put us at the highest level since July 2011. I believe it's just a timing issue and the trend of rates, across the curve, is up. 10 YR YIELD The softening of …
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Housing, mfr’g and services data
Existing home sales in March totaled 5.6mm, 50k more than expected and up from 5.54mm in February. These closings likely cover contracts signed between December and February and thus captures the rise in mortgage rates where rates went from about 4.20% to nearly 4.70%. I'm sure for some there was a scramble to close and lock in rates as quickly as possible. With …
All staring at the 10 yr
The rise in interest rates today is global. To name a few countries, Australian and Chinese 10 yr yields are up 5-6 bps. The Japanese 40 yr (furthest away from yield curve control) is higher by 1.5 bps. The German 10 yr yield is at a 6 week high, up by 4 bps to .63%. The French 10 yr yield is also at a 6 week high, up by 3 bps to .84%. At least in Europe, considering …
Overseas news of note
Mark Carney seems intent on getting his picture on the wall of those central bankers that believe that Great Depression type monetary policy is prudent when we aren't anywhere near one. While the BoE is most likely raising rates this year and Carney said so himself yesterday, he also implied he's already getting cold feet about doing so in May which is when the market …
Claims/Philly mfr’g, inflation pressures grow
Initial jobless claims totaled 232k, about in line with the estimate of 230k and little changed with 233k last week. The 4 week average which smooths out the Easter holiday is 231k vs 230k in the week prior. Continuing claims, delayed by a week, fell 15k after rising by 60k last week. The bottom line is a ditto of the bottom line each and every week over the past …
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Some things going on
The commodity spike continues, especially in aluminum and nickel. Yesterday's close in the CRB index was up 1.8% to the highest since July 2015 which led to a near 4 yr high in inflation expectations in 10 yr TIPS (and inflation breakevens have risen globally). For those that drive, gasoline prices at the pump are up 14% y/o/y. For those that like chocolate (I'm a …
Beige Book comments of note
“Economic activity continued to expand at a modest to moderate pace across the 12 Federal Reserve Districts in March and early April.” “Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture, and transportation expressed concern about the newly imposed and/or proposed tariffs.” “Consumer spending rose in most regions, …
The CRB breaks above
The CRB commodity index has broken above 200 again, up more than 1% today and now sits at the highest level since October 2015. While oil is certainly a main contributor today, nickel is spiking by more than 10% on worries that a furtherance of Russian sanctions will hit Norilsk Nickel, the world’s 2nd biggest producer. Aluminum, after rallying by 22% over the past …
I believe the message is simple
With the yield curve continuing to compress, the debate over what it means keeps on. To me, it is very simple the message being sent. We must understand that we no longer have economic cycles. We have credit cycles that ebb and flow with monetary policy. After all, when the Fed cuts rates to extremes its only function is to encourage the rest of us to borrow a lot …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.