When ECB president Christine Lagarde talks about wanting to avoid fragmentation in European bonds, she doesn't want to see spread widening between Germany and the higher indebted countries like Italy, Spain and Portugal. Today the Italian 10 yr/German 10 yr yield spread is widening by another 5 bps to the widest since May 2020 at 224 bps but for perspective, it got as …
[Read more...] about Fragmenting again/Japan steps up verbal intervention
Ahead of the ECB presser, European bonds are again selling off sharply after the prepared statement hinted at the possibility of a more than 25 bps rate hike in September after they do 25 bps in July “If the medium term inflation outlook persists or deteriorates.” The German 2 yr yield is jumping by 12 bps to .825, the highest since August 2011. Their 10 yr yield is …
[Read more...] about European yields jumping AGAIN/Jobless claims
If this chart of 2022 earnings estimates is any indication, the sellside assumes not just a soft landing for the economy, but not even a landing as estimates go to a new high. I just don't see how this possibly can be achieved. 2022 EPS Estimate Adding some color to the high level of inventory that many retailers hold of certain goods that consumers …
Treasury yields are rising to the highs of the day after the soft results of the 10 yr note auction. The yield of 3.03% was more than 1 bp above the when issued pricing. The bid to cover of 2.41 was below the one yr average of 2.51 and the lowest since last November. And, dealers got left with 17% of the auction, the 2nd highest amount in a year. This as QT is upon …
The yen and European bonds again are the main market story I believe again today, or at least should be. The yen is down another 1% and is on a fast track to a 24 yr low vs the US dollar if it sells off less than another one yen. The catalyst remains the same and BoJ Governor Kuroda said it again today, "At this moment, the Bank of Japan must continue its support for …
[Read more...] about Again, the yen and European yields/Housing/Consumer borrowing
The Reserve Bank of Australia is another central bank that went way too far with its easing over the past few years and now is doing a complete 180. They hiked rates overnight by 50 bps to .85%, the biggest move since 2000. Only a 25 bps rate hike was expected. Governor Lowe said "The board is committed to doing what is necessary to ensure that inflation in Australia …
Lower stock prices tighten financial conditions in two ways. One is direct and the other is more indirect. It raises the cost of equity for those companies looking to issue it in order to raise capital and it might (and likely does) influence the spending behavior of those who feel less wealthy. On the former, the front page of the Financial Times today is reporting …
[Read more...] about The rising cost of equity capital/Some data/Boris
May payrolls rose by 390k, above the estimate of 318k, partly offset by a 22k downward revision to the two prior months. The private sector added 333k of this, 32k more than expected and thus government workers contributed the most to the upside. The household survey said 321k jobs were added and when combined with a similar 330k person increase in the labor force, …
As we all try to figure out, especially the Fed, the amount of rate hikes and QT that will be needed to not just tame inflation but eventually bring it back to the magically invented level of 2% without damaging the economy and also deflating further asset price inflation that has also run rampant over the past few years, we have to understand that the US economy and …
ADP said a net 128k private sector jobs were added in May, well below the estimate of 300k and April was revised down by 25k to 202k. Notable was the 2nd month in a row of job declines for small businesses, those with less than 50 employees. These companies are having a tough time competing with the newly elevated wage bar set by its bigger competitors. The service …
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.
