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The 2 yr note auction was mixed, which of course happened within minutes of Yellen basically telling us she would like to hike again in December. The yield of 1.462% was a hair above the when issued but the bid to cover of 2.88 was higher than the one yr average of 2.77. Direct and indirect bidders took 63% of the auction which is slightly above the previous 12 month …

[Read more...] about 2 yr note auction and more on Yellen

August new home sales totaled 560k annualized, 25k less than expected and down from 580k in July (revised up by 9k). That August print is the weakest since December. The issue with inventories is being slowly alleviated as the number of homes for sale rose to the most since May 2009 and combined with the home sale decline, months’ supply rose to 6.1 from 5.7 and that …

[Read more...] about Housing, confidence, mfr’g oh my

Fed and Inflation Yesterday we had Fed President Dudley expressing confidence that inflation will rebound and thus he thought more rate hikes were necessary. Another voting member did as well, Neel Kashkari, the ultimate dove who still believes .625% is the appropriate interest rate (he hasn’t yet voted for a rate increase since he started but believes in QT). He’s …

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Dallas After better than expected NY and Philly manufacturing surveys, the Dallas Fed said its index for September rose to 21.3 from 17 and that’s a 7 month high. The estimate was for a drop to 11.5. New orders also rose but the growth rate of those orders slowed. The employment component rose to the best since April 2014. The recent rise in commodity prices drove …

[Read more...] about Another good mfr’g report

German Election The German market reaction to the election yesterday where the far right Alternative for Deutschland party (AFD) got 13% of the vote in protest mostly to Merkel’s decision to bring in about 1mm migrants a few years ago was interesting. The euro is falling below $1.19 with a .6% drop which in turn is helping to lift the German DAX even though France, …

[Read more...] about German markets / Chinese property stocks / Japan / The big US housing issue

United States Non voting Fed member John Williams who has been on board with QT and the rate hikes believes that 2.5% will be where the Fed funds will end up being as ‘normal.’ Well, they are only half way there in the 9th year of this expansion. It is this belief shared by others why they will be hiking again by year end, all else equal. We hear from two other Fed …

[Read more...] about Fed heads speak / European business / China responds

Home Sales Existing home sales in August, measuring mostly contracts signed in the April thru July time frame, totaled 5.35mm annualized, 100k below expectations. It’s down from 5.44mm in July and it’s the slowest pace of closings in a year. Single family closings have now fallen in 4 of the past 5 months. Inventories remain modest as the number of homes for sale …

[Read more...] about Home closings in August fall to 1 yr low

United States If you hear in the FOMC statement or in Janet Yellen’s press conference any commentary on financial conditions, here is a chart of the Goldman Sachs Financial Conditions Index that they are likely referring to with a lower level being easier: GS US FINANCIAL CONDITIONS INDEX .... Following all the stock market sentiment data I talked about …

[Read more...] about Ahead of the FOMC / Sentiment / Housing / Other

United States A day before the FOMC announcement, let’s talk sentiment for a quick minute. Last Wednesday I included this commentary from Gallup which was in a release from the previous Friday: ‘the Wells Fargo/Gallup Investor and Retirement Optimism Index rose to the highest level since September 2000. They referred to this as a “new surge of optimism among US …

[Read more...] about Market sentiment into FOMC / Housing Starts, Permits / Germany