While I’m very cognizant and aware of the growing economic risks and worried that they will only grow, Boston Fed President Eric Rosengren I believe laid out the most cogent explanation as to why the Fed should not be cutting interest rates from already such low levels. “The stance of monetary policy is accommodative. Additional monetary stimulus is not needed for an …
Latest Data
Rates/Bullard tells/Go India!
With the Fed on track for another repo facility today, it does seem to have worked in keeping the general collateral overnight repo rate tame at 1.95%. This rate touched 8.75% on Tuesday. We still need to see a lower effective fed funds rate which will get updated soon today. As of Wednesday it was still at 2.25%. As for one Fed member, James Bullard today is …
Home sales
Existing home sales in August totaled 5.49mm, about 100k more than expected and up from 5.42mm in July. These closings likely captured contract signings in the May thru July time frame. Because the number of homes for sale fell, months’ supply is down to 4.1 from 4.2. The median home price was up by 4.7%. I wonder if this is SALT related or not but the Northeast is …
Jobless claims and Philly mfr’g
Initial jobless totaled 208k, 5k less than expected and vs 206k last week. This brings the 4 week to 212k from 213k last week and vs 217k the week prior. Again, the pace of firing’s remains very subdued as many companies wait to see how things play out with trade, tariffs, etc… but also want to hold on to their people because of the difficulty in finding good …
Central bank stuff
Part of the ECB policy announcements last week was a new long term refinancing operation which would essentially hand money over to banks for free on the hopes they would re-lend into the private economy. Expectations going into today's new tranche was that banks would take at least the amount paid back on a maturing one earlier this week. The total repaid was 32b …
And the Fed says…
So the Fed gave a one word answer for the fully expected 25 bps rate cut and that was "In light of the implications of global developments for the economic outlook as well as muted inflation pressures." As stated here many times, because the Fed only focuses on PCE and not CPI where core CPI is at an 11 year high and 2%+ for 18 straight months, they can call inflation …
Housing starts surprise to the upside
Housing starts in August surprised to the upside with a print of 1.364mm vs the estimate of 1.25mm and July was revised up by 24k. Again, most of the increase was seen in the multi family sector where starts grew by 110k m/o/m to a 3 month high. Single family starts were up by 39k to the most since January. As for the forward looking permits, single family was up …
Money Markets/Trade/Confidence & Sentiment
The moves in money market rates have of course been wild over the past two days and with the Fed coming in today with another repo facility, something they haven't done in about 10 years, clearly show that something is broken. The broader implications I think can be boiled down to one thing, can the Fed keep the effective fed funds rate within its target range which …
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Builder confidence in light of drop in rates
The September NAHB home builder index rose to 68 from 67 in August (revised from 66) and that was 2 pts better than expected. All of the gain was in the Present Conditions component as the Expectations component fell 1 pt and Prospective Buyers Traffic was unchanged at the breakeven level of 50. Keep in mind, the headline index is at the same level it was in late 2016 …
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IP
Industrial production surprised to the upside in August, rising by .6% m/o/m vs the forecast of up .2%. The key manufacturing component rose by .5% m/o/m but after falling by .4% in July. Internally, motor vehicles/parts fell by 1% after rising by .5% in July. Machinery production rose by 1.6% after dropping by 1.7% in July. Mining output also got back what it lost in …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.