Have a great Thanksgiving, //www.youtube.com/watch?v=XhvgqSyWZA0 As we've been bombarded with Fed heads over the past 3 weeks since the last FOMC meeting, I doubt we'll read anything new in the laundered minutes that will be released today at 2pm est. Here were some important quotes I gleaned from the retail earnings calls …
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Poor 7 yr auction
The 7 yr note auction was pretty poor. The yield of 3.89% was about 3 bps above the when issued pricing just prior. The bid to cover of 2.33 was below the one yr average of 2.47 and the lowest since December 2021. And, dealers got stuck with 21.4% of the auction, the most since July 2021. This auction follows the really bad 10 yr and very good 30 yr seen a few weeks …
“Higher Rates Squeeze Small Businesses”
An economic slowdown in response to higher interest rates is not one event, it is a progression of events that take time to play out. The most immediate impact is always on the two biggest sectors directly impacted, like housing and autos but it takes time to metastasize to other parts of the economy. Much depends on how sensitive one is to the rising cost of capital …
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What happens after the rate hikes?/ECB breathes sigh of relief
Much of the Fed speak we heard last week was really nothing new in terms of revealing any special insight that we don't already know. They will hike by the slower pace of 50 bps in December to 4.25-4.5% and maybe, just maybe, we'll get a few more 25 bps after that in 2023. Thus, as we're likely coming to the end of this I believe it is what happens next …
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Home sales, prices and rental trends
Existing home sales in October totaled 4.43mm, a touch above expectations but down from 4.71mm in September and the lowest print since December 2011 if we take out the covid plunge. Assume many of these contracts were signed over the summer when mortgage rates were between 5.5-6% compared to just under 7% now. The median home price gain moderated to ‘just’ 6.6%, the …
TIC data/Retail comments/Japanese inflation
Wednesday night the September Treasury capital flow data came out and there was another month of huge buying of US notes and bonds but again a lot of it came from the Caribbean and thru the UK banks (which means it could be anyone) while central banks were net sellers again. A net $60.4b of notes and bonds were purchased bringing the year to date amount to …
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Bulls rise to highest of the year
I forgot to mention the stock market sentiment data and it was worth taking note of. Today’s AAII data revealed that Bulls rose to 33.50, the most since the last week of December 2021. They rose 8.4 pts w/o/w and have doubled off the late September lows. Bears fell 6.8 pts to 40.2 and while that is off the above 60 level seen in late September, it still is above the …
With only one meeting left, fade Bullard/Housing, mfr’g and claims
Before I get to the economic data, I just want to comment (rant) on St. Louis Fed president Jim Bullard and his comments today. Firstly, Bullard in his career as a Fed president has been all over the map, dovish, hawkish, weak knees in the face of market selloffs and tough leather too when markets go down. In other words, there has been nothing consistent over his …
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Some stuff
The sharp rise in interest rates is not just weakening the residential real estate market, it is slowing the commercial side too as it should. Yesterday the October US Architecture Billings Index fell under 50 at 47.7 from 51.7 in September. The AIA chief economist said "Economic headwinds have been steadily mounting, and finally led to weakening demand for new …
The builder incentives are picking up
The November NAHB home builder survey deteriorated further, falling to 33 from 38 and 3 pts below the estimate. This index has fallen every single month this year, is down by 36 pts over the past 6 months and is just 3 pts from matching the Covid low. Present conditions fell 6 pts m/o/m to 39 and the Future outlook was lower by 4 pts to 31. Prospective Buyers Traffic …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.