A week before Quantitative Tightening will begin and with very much reduced expectations that the Fed will follow with a rate hike in December, the 3 yr note auction did not go that well. The yield of 1.433% was above the when issued of 1.425-1.43%. The bid to cover of 2.70 was below the one year average of 2.83. And, direct and indirect bidders took 57% of the …
[Read more...] about Today’s 3 yr note auction was soft. What it means…
United States We know the material damage done from Harvey and Irma both in terms of lost activity and the subsequent rebound will be all over the economic data in coming months and quarters. Thankfully Irma’s damage should be much less than feared. Putting aside the awful human toll, we don’t believe though it will influence what the FOMC will decide on. We also …
[Read more...] about Even more construction workers needed / FX / Data
I've updated my investment ideas page. (members click here). As always, this week's write-up includes specific equity, ETN, and ETF analysis. Here's a sample from this week's update: With respect to your US equity exposure, it’s time to be taking chips off the table or at least putting in stops depending on one’s time horizon. A longer-term time horizon is an …
[Read more...] about UPDATE – Investment Ideas: Week of 9/8/17
The strangest behavior in markets yesterday was the rip higher in the euro after Mario Draghi’s press conference at the same time European sovereign bonds spiked up in price and down in yields. My only guess is the euro further priced in a tapering of QE to be announced in October and initiated in either December or January while the bond market assumed that it would …
As expected, we’ll have to wait until October 26th before we get details on the ECB’s plans for QE in 2018 but a taper is still most likely. Draghi raised his 2017 GDP forecast to 2.2% from 1.9%, acknowledging the recent improvement in activity (he said “robust and broad based” but he still believes in NIRP and massive QE because of the obsession with 2% inflation). …
The 3 yr note auction was excellent. The yield of 1.52% was below the when issued by almost 1 bp. The bid to cover of 3.13 was well above the 12 month average of 2.81 and is the best since December 2015. Also of note, direct and indirect bidders took almost 75% of the auction vs the one year average of 61%, thus leaving the dealers with the smallest amount since at …
United States The National Association for Business Economics released their Q2 Business Conditions survey and things did improve from Q1 but what was most noteworthy were the comments on the labor market. They said “Materials cost pressures appear to be easing, but more firms are facing higher labor costs and difficulty in hiring, especially skilled labor…Pricing …
[Read more...] about Anecdotes on wages / China / ECB / Gold
The June Chicago PMI manufacturing index jumped to 65.7 from 59.4 and that was better than the estimate of 58. This is the best level since May 2014 but has gotten extremely volatile month to month. Smoothing out this out still puts the 6 month average at 58.1 vs 53.1 in 2016. New orders rose also to the best level since May 2014 and backlogs jumped to the most since …
[Read more...] about Chicago PMI jumps / Consumer confidence slips
The UK Mark Carney remains trapped in his self imposed monetary mess where he can’t even find the will to at least take back the emergency rate cut after Brexit even though his economic estimates were wildly wrong and now he has an inflation problem relative to wages. Responding to the slowly growing mutiny in the MPC he said “Now is not yet the time to begin that …
[Read more...] about Carney pushes back / Evans wants inflation / Other
Well now it's official, DJT doesn't like a strong dollar. Not that it's a surprise considering his bizarre obsession with trade deficits but now we have confirmation via the President's WSJ interview. The implications run right into possible tax reform and the border adjustment tax bandied about. That is because the 20% BAT tax on importers was modeled to be offset by …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.
