BoJ Governor Kuroda put aside speculation that an imminent change in policy was forthcoming. "Given there is still a distance to the achievement of the 2% price stability target, I don't think that we are at a stage where we consider the timing for a sol called exit or how to deal with it. The BoJ thinks its necessary to continue tenaciously with the current powerful …
What’s most important
The government shutdown is noise and nonsense. It will end very soon. Moving on. Outside of a slew of corporate earnings this week, the BoJ two meeting ending tomorrow and Thursday's ECB get together are of large importance as both are also in the midst of a change in policy. I don't expect much of anything new from the BoJ but an alteration of its yield curve …
Consumer confidence moderates
The preliminary January UoM consumer confidence index fell to 94.4 from 95.9 in December and that was below the estimate of 97. Notwithstanding all the economic enthusiasm, this is the lowest print since July and below the 2017 average of 96.8. The main reason for the m/o/m decline was the 4.6 pt drop in Current Conditions as Expectations rose .5 pt after the 4.6 pt …
Death, taxes and…
We are going to hear about the possibility of a government shutdown all day but I'll just say this: Death, taxes and if the government shuts down, it will soon reopen. We enter the day with the US 10 yr yield at that important technical level of 2.63%. Unfortunately there is no US data point today of importance to influence whether we break above or fail. It will …
Give me inflation protection!
I almost never give color on a US Treasury TIPS auction. But, today I am. The Treasury just auctioned off 10 yr TIPS and the demand was robust. The yield of .548% was well below the when issued of .575%. It saw the best bid to cover since May 2014 at 2.69. That level compares with the average seen last year of 2.33. Also of note, direct and indirect bidders took 89% …
Claims/Housing/Mfr’g
Initial jobless claims totaled 220k, well less than the estimate of 249k and down 41k w/o/w. While this is a great number, the seasonal adjustments around the holidays are not always reliable and 7 states had to estimate their claims which is unusual. Thus, I would take this figure with a grain of salt. Smoothing this out, the 4 week average was 245k vs 251k last week …
Rates/Sentiment/China
Keep a close eye on rates again as the US 10 yr yield is back to 2.60%. To state again, the high close in 2017 was 2.63% and anything above that was last seen in July 2014. The implied inflation rate in the 10 yr TIP yesterday closed at 2.06%, just 1 bps from the highest level since September 2014. The German 10 yr yield is up by 2 bps to .58% with .60% the key level …
We need some more help on the buy side
With US interest rates continuing to creep higher, the Fed removing themselves as a buyer of $450b of US Treasuries from Q4 2017 thru year end 2018 (with another $600b taken out in 2019) and US Treasury issuance about to double this year, we need cold hard cash from others to suck up all this supply. It is why the focus on the behavior of our foreign friends takes on …
Beige Book bullet points and a bottom line
Here are the key bullet points from the Fed Beige Book: “Reports from the 12 Federal Reserve Districts indicated that the economy continued to expand from late November through the end of the year, with 11 Districts reporting modest to moderate gains and Dallas recording a robust increase.” “The outlook for 2018 remains optimistic for a majority of contacts …
[Read more...] about Beige Book bullet points and a bottom line
Sentiment/Central Banker Talk
Continuing the flow of euphoric sentiment numbers, the weekly Investors Intelligence report got even more so. Bulls rose to 66.7% from 64.4% last week. That is the highest since April 1986, around the last time the US government got around to major tax cuts. Bears fell to a measly 12.7% from 13.5%. The spread between the two thus builds to 54 vs 50.9 last week and …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.