In contrast to the mediocre 3 yr and 10 yr auctions this week, the 30 yr was solid. The yield of 2.32% was priced below the when issued of almost 2.34%. The bid to cover of 2.47 was above the 12 month average of 2.32. Also, dealers were left with 17% of the auction vs the one year average of 21%, leaving the balance with direct and indirect bidders. Well if …
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The CPI
The March CPI rose .6% m/o/m and .3% ex food and energy, both one tenth more than expected. These can’t be explained away by easy comps. The easy comps are y/o/y where the headline increase was 2.6% and the core rate rose by 1.6% from 1.3%. That .6% headline m/o/m increase matches the quickest since 2009. That is NOT base effect. Energy prices rose 5% m/o/m and food …
Inflation day
Ahead of today's CPI where we should be looking at the m/o/m increase because of the easy comps of y/o/y, the NY Fed yesterday published its updated Survey of Consumer Expectations. Within it, median inflation expectations both one year and 3 year's out saw a one tenth increase to 3.2% and 3.1% respectively. These "have increased steadily over the past five months and …
Blah auction
The 10 yr note auction was a bit light. The yield of 1.68% was a touch above the when issued. The bid to cover of 2.36 was below the 12 month average of 2.42 and the lowest since December. Direct and indirect bidders took down 76% of the auction, spot on with the one year average. Bottom line, this auction is best described as blah and yields in response aren’t …
3 yr auction mixed
The 3 yr note auction, very sensitive to the Fed’s commitment to not wanting to hike rates until 2024, was mixed. The yield of .376% was a hair below the when issued pricing and direct and indirect bidders took 67% of the auction, just above the 12 month average of 65%. The bid to cover of 2.32 though was below the one year average of 2.44 and the weakest since …
Distilling the macro into the micro
Earnings reports in the coming month will help us distill the macro into the micro and particularly how companies are dealing with all the supply issues. Expect to hear to similar things to what WD-40 said on Friday when they reported earnings that while demand for their product is improving, "the pandemic has also caused some disruptions and constraints to our supply …
‘Nothing to see here’
The March PPI rose 1% m/o/m, double the estimate and the core rate jumped by .7%, more than triple the forecast. Versus last year, producer prices rose 4.2% and by 3.1% ex food and energy. Easy comps for sure but considering the extent of the beat, it is more than just that. Energy prices were up by 5.9% m/o/m after a 6% rise in February. Food prices grew by .5% …
Some data news/Commodity price check
Ahead of the US PPI figure today, China said its PPI calculation rose 4.4% y/o/y in March, up from 1.7% in February and above the estimate of 3.6%. Supply constraints, higher commodity prices and transportation costs were the main reasons as it is everywhere. What it also means is that China is going to start exporting higher prices to the rest of us if this persists. …
Claims data, stubbornly high still
Initial jobless claims totaled 744k, 64k more than expected and up from 719k last week. The 4 week average is now 724k from 721k last week. Positively, those receiving pandemic unemployment assistance (PUA) did fall to 152k from 237k but those continuing to get it remains high. Delayed by a week, continuing claims fell by 60k w/o/w to 3.73mm but that was almost 100k …
Bull boat full again/Supply crunches/Some data
Yesterday we saw the bull sentiment get extreme in the 'professional' community as measured by Investors Intelligence. Today we see the individual investor sentiment has gotten extreme too. Bulls jumped 11.1 pts w/o/w to 56.9. The is the highest since the 1st week of 2018. Bears fell to the lowest since April 2019 at 20.4, down 2.8 pts w/o/w. The spread between the …
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Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.