Positives 1)The US trade deficit in April narrowed to $87.1b from $107.7b in March which was a record high. Exports rose by 3.5% while imports fell by 3.4%. 2)After seeing a 1.3% increase in April from March, producer prices in Japan were unchanged m/o/m in May. That was below the estimate of up .6% but the y/o/y gain was still 9.1% vs 9.8% in the month before. …
[Read more...] about Succinct Summation of the Week’s Events – 6/10
Consumer confidence took another big hit in May with the UoM index falling to 50.2 from 58.4. That is the weakest level on record with this survey back to 1978. Both the main Current Conditions and Expectations components were down again. One yr inflation expectations rose one tenth to 5.4%, matching the highest level since 1981. Inflation expectations longer term, …
May headline CPI rose by 1% m/o/m, 3 tenths more than expected while the core rate was higher by .6% m/o/m which was one tenth more than anticipated. Versus last year, headline inflation is up 8.6%, a new cycle high and the core rate printed up 6%. Energy prices, 8% of CPI, was higher by 3.9% m/o/m and 35% y/o/y. Food/beverages (14% of CPI) was higher by 1.1% m/o/m …
[Read more...] about Hot inflation, back to 100% odds of another 50 bps in Sept
When ECB president Christine Lagarde talks about wanting to avoid fragmentation in European bonds, she doesn't want to see spread widening between Germany and the higher indebted countries like Italy, Spain and Portugal. Today the Italian 10 yr/German 10 yr yield spread is widening by another 5 bps to the widest since May 2020 at 224 bps but for perspective, it got as …
[Read more...] about Fragmenting again/Japan steps up verbal intervention
Ahead of the ECB presser, European bonds are again selling off sharply after the prepared statement hinted at the possibility of a more than 25 bps rate hike in September after they do 25 bps in July “If the medium term inflation outlook persists or deteriorates.” The German 2 yr yield is jumping by 12 bps to .825, the highest since August 2011. Their 10 yr yield is …
[Read more...] about European yields jumping AGAIN/Jobless claims
If this chart of 2022 earnings estimates is any indication, the sellside assumes not just a soft landing for the economy, but not even a landing as estimates go to a new high. I just don't see how this possibly can be achieved. 2022 EPS Estimate Adding some color to the high level of inventory that many retailers hold of certain goods that consumers …
Treasury yields are rising to the highs of the day after the soft results of the 10 yr note auction. The yield of 3.03% was more than 1 bp above the when issued pricing. The bid to cover of 2.41 was below the one yr average of 2.51 and the lowest since last November. And, dealers got left with 17% of the auction, the 2nd highest amount in a year. This as QT is upon …
The yen and European bonds again are the main market story I believe again today, or at least should be. The yen is down another 1% and is on a fast track to a 24 yr low vs the US dollar if it sells off less than another one yen. The catalyst remains the same and BoJ Governor Kuroda said it again today, "At this moment, the Bank of Japan must continue its support for …
[Read more...] about Again, the yen and European yields/Housing/Consumer borrowing
The Reserve Bank of Australia is another central bank that went way too far with its easing over the past few years and now is doing a complete 180. They hiked rates overnight by 50 bps to .85%, the biggest move since 2000. Only a 25 bps rate hike was expected. Governor Lowe said "The board is committed to doing what is necessary to ensure that inflation in Australia …
Lower stock prices tighten financial conditions in two ways. One is direct and the other is more indirect. It raises the cost of equity for those companies looking to issue it in order to raise capital and it might (and likely does) influence the spending behavior of those who feel less wealthy. On the former, the front page of the Financial Times today is reporting …
[Read more...] about The rising cost of equity capital/Some data/Boris
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.
