Uncategorized

As uneventful was the 3 yr note auction yesterday, today’s 10 yr was as well. The yield of 1.518% was a hair above the when issued yield. The bid to cover of 2.43 was just below the previous one yr average of 2.46. The modest positive was that direct and indirect bidders took 87% of the auction, above the 12 month average of 82% but that is the 2nd least since …

[Read more...] about Another uneventful auction

The Bank of Canada kept rates unchanged at .25% as expected and they are also no longer saying inflation is temporary. While QE is over, they are still reinvesting proceeds from the maturity of holdings. In their statement they said “CPI inflation is elevated and the impact of global supply constraints is feeding through to a broader range of goods prices. The …

[Read more...] about After ending QE, BoC sits tight/Job openings

The 3 yr note auction, the most sensitive of this week’s auctions to expectations for Fed policy with its fed funds rate, was a complete non event. The yield of 1.00% was smack where it was trading in the when issued market. The bid to cover of 2.43 was exactly what the previous one year average was. Lastly, direct and indirect bidders took down 70% of the auction, …

[Read more...] about 3 yr auction a non-event but…

I've kept making the case that the reason why the yield curve is flattening is because of the market pricing in Fed tightening as the QE taper is now upon us (however the speed). This is because there is no such thing anymore of a 'soft landing' when the Fed tries to normalize policy as because the economy and markets are so dependent on Fed policy and intertwined, …

[Read more...] about A few things

November payrolls grew by just 210k, well less than the estimate of 550k and only partly offset by an upward revision of 82k to the two prior months. Of this, the private sector added 235k vs the forecast of 536k and vs 628k last month. The household survey in stark contrast though saw a large 1.136mm job gain and combined with the increase in the labor force of 594k, …

[Read more...] about Jobs data, a miss with one, big upside with another

Well, we know now why Warren Buffett and Charlie Munger keep stock piling cash. Munger said today at the Sohn conference in Australia, "I consider this era an even crazier era than the dotcom era." The price of a 40 foot shipping container from Shanghai to LA has fallen to the lowest level since July at $9,698, off the September peak of $12,424 but still more than …

[Read more...] about “even crazier…”/Transportation costs/PMI’s

Initial jobless claims totaled 222k, 18k less than expected after the big surprise last week which saw a revised print of 194k from 199k. Smoothing out the influence of the seasonal adjustment issues around the holidays, the 4 week average fell to 239k from 251k and continues to creep to its pre Covid levels. Delayed by a week, continuing claims fell another 107k to …

[Read more...] about Claims/yield curve

We can add Cleveland Fed president Loretta Mester, who does vote in 2022, to the growing list of Fed members who want to quicken the pace at which they would end QE. "Making the taper faster is definitely buying insurance and optionality so that if inflation doesn't move back down significantly next year we're in a position to be able to hike if we have to." She made …

[Read more...] about Not much today