After some really mediocre Treasury auctions a few weeks ago notwithstanding multi year highs in yields (for the shorter term auctions), today’s 3 yr was also very ordinary. The yield at 1.75% was a touch above the when issued. The bid to cover at 2.76 was slightly below the previous 12 month average of 2.81. Direct and indirect bidders took 62.5% of the auction which …
JOLTS/TASA
The number of job openings totaled 6.093mm in September, slightly above the estimate of 6.075mm and little changed with August at 6.09mm. This is just off the record number of job openings seen in July 2017 at 6.14mm. The level of hirings (down by 147) and separations (down by 33) was certainly skewed by the storms. Those quitting rose after dropping in August. I …
Higher Inflation in Eurozone is VERY Underappreciated Risk
Yesterday’s 1.7% rise in the CRB index matched the 2nd biggest in about a year. The highest level in 9 months is being met by mostly yawns in conventional yields. Looking specifically at the epicenter of the biggest bubble, that being the European bond market, there is an uptick in inflation expectations as the German 10 year inflation breakeven is up 3 bps to 1.24% …
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Good Morning
It’s refreshing to hear from a central banker some honesty about what the result of excessively easy money is and the risks that are created. The Governor of the PBOC Zhou wrote a paper titled “Safeguarding the Bottom Line of No Systemic Financial Risks.” He said “High leverage is the ultimate origin of macro financial vulnerability…In sectors of the real economy, …
The Service Side of Things
The ISM services index for October rose a touch to 60.1 from 59.8 but that was 1.6 pts above the estimate. It is also the best level since August 2005. Notwithstanding the headline rise, the internals were somewhat mixed. New orders fell slightly to a still high 62.8 from 63 last month. Backlogs fell 2.5 pts after rising by 2.5 pts in September. Employment was up .7 …
The Payroll Data Says…
October payrolls grew by 261k, well below the forecast of 313k but that was completely offset by a 51k person increase to September and also, August was revised up by 39k. After a bizarre spike of 906k in September in the household survey, this month it was down by 484k and combined with the drop of 765k in the size of the labor force (after a large 575k increase in …
Claims, Productivity, and Unit Labor Costs
Initial jobless claims fell to 229k from 234k last week. That is below the estimate of 235k and brings the 4 week average to 233k from 240k. Processing claims in Puerto Rico and the US Virgin Islands is still an issue but ex this has firing’s at a very modest rate still. Continuing claims fell by 15k to a fresh 44 year low. Productivity in Q3 was a better than …
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A dovish BoE hike
We got a dovish hike from the BoE as it seems they will go really slow in raising rates further from here. They think inflation peaks right now at 3% and they expect it to “fall back over the next year.” They also harped highlighted “the decision to leave the EU is having a noticeable impact on the economic outlook.” While they acknowledge “the overshoot of …
A Bit of Everything
Assume at 8am est the BoE will finally get off its arse and hike rates by 25 bps more than one year after it cut by the same amount because they feared the end of the world after the Brexit vote. The only question is whether they plan a few more in 2018 or this is a one and done for a while. The 2 yr Gilt yield is at a crucial spot at .50%. It matches the same level …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.