The Boock Report

We have a temporary respite in the plunge in the Turkish lira as it is rebounding about 5% with Corporate Turkey (particularly the banks) now putting huge pressure on the government to do something, anything. With this whole episode we can of course easily blame the economic incompetence of the Erdogan government and paralysis of its central bank but blame also has to …

[Read more...] about A lot going on

Understanding what is going on in Turkey (Lira down another 7% but way off the lows) is certainly a lot easier than figuring out how much it (and if it) spreads and infects others. Selling off the markets of those countries with high current account deficits is the natural response but how banks that are highly exposed respond will be something to watch. The Euro …

[Read more...] about FX/Rates/US Housing

The July consumer price index rose by by .2% m/o/m both headline and core as expected. The y/o/y headline gain was 2.9% while the core rate accelerated to a gain of 2.4% y/o/y from 2.3% vs the estimate of no change. Go back to September 2008 the last time we saw a faster rate of core inflation. The crux of the inflation remains on the service side. Services …

[Read more...] about 10 year high in core CPI

I admit, I didn't fully think thru the potential broader implications of the economic and financial mess that is Turkey. I initially believed it was of their own political making and now exaggerated by the liquidity drain that is going on via higher US rates, QT and the reduction in QE from the ECB and BoJ as accidents are more prone to happen when central banks …

[Read more...] about The possible broader implications

Producer prices in July were unchanged m/o/m instead of rising .2% as expected. The core rate was higher by .1% vs the .2% estimate and both are down from .3% gains in June. Versus last year, headline PPI was up 3.3% headline and 2.7% core, both one tenth less than expected and down one tenth from June. Both are off last month’s 7 year highs. Keeping a lid on the …

[Read more...] about Inflation/Claims

The always volatile Japanese machine orders in June fell 8.8% m/o/m, much worse than the estimate of down 1% and follows a 3.7% drop in May and a 10.1% spike in April. While as stated this number jumps around a lot, we can't dismiss the weakness because it coincides with a softening seen in manufacturing confidence where the last Japanese Markit PMI for July was the …

[Read more...] about Overseas goings on ahead of US inflation stats

The $26b 10 yr auction, the biggest ever, was better than the 3 yr. The yield of 2.96% was right in line with the when issued but the bid to cover of 2.55 was above the 12 month average of 2.47 and dealers were left with 27.5% of the auction, below the one year average of 29%. Bottom line, finally we get a decent auction and the 10 yr yield is down slightly in …

[Read more...] about 10 yr auction better

The signs continue to build that the US housing market is moderating. With mortgage rates at a 7 year high and the average price of a home at a record high, mortgage applications to buy a home fell 2% w/o/w and down for the 4th straight week. It is now down by 1.6% y/o/y and the index is at the lowest level since mid February. Refi's fell by 4.5% w/o/w and 35% y/o/y. …

[Read more...] about Housing/Sentiment/Overseas

The 3 yr note auction was soft. The yield of 2.765% was a hair above where it was trading just prior and the bid to cover of 2.65 was well below the one year average of 2.88. Also reflecting weakness, dealers got stuck with 45% of the auction, more than the 12 month average of 39%. Bottom line, this is another auction with limited demand even with yields at 11 yr …

[Read more...] about 3 yr auction soft