Jay Powell and indirectly the Fed are getting criticized for raising rates 200 bps over 3 years to a real rate of ZERO with a few more maybe to come over another year (market only expects 2 more thru 2019). Imagine if Trump was President in the mid 2000's as Greenspan hiked by 425 bps over 2 years. Jay Powell is taking the stage at 12pm and don't be surprised if …
5 yr auction uneventful/We await Powell
The 5 year note auction was uneventful. The yield of 2.88% was spot on with the when issued. The bid to cover of 2.49 was about the same as the 12 month average of 2.47. Direct and indirect bidders took 70% of the auction vs the one year average of 71% leaving dealers with the balance. Bottom line, demand was about average, again making the search for a great …
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Confidence slips but off best in 18 years
The November Conference Board consumer confidence index was 135.7, exactly as expected but down 2.2 pts from October which was the best since 2000. The Present Situation did rise about 1 pt but was completely offset by a 4 pt drop in Expectations. One year inflation expectations rose one tenth to 4.9%, smack in line with the 5 year average. The answers to the jobs …
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Clarida
There was nothing in Fed Vice Chair Richard Clarida’s speech today that is leaning towards any type of pause, particularly next month. He in fact talked out of both sides, “Raising rates too quickly could unnecessarily shorten the economic expansion, while moving too slowly could result in rising inflation and inflation expectations down the road that could be costly …
Double down again or try something new?
If nothing productive comes of the Trump Xi meeting at weeks end, I think it's fair to say that US tariffs on Chinese goods and the threat of more was not the effective tool its been made out to be in facilitating a trade deal out of the Chinese that would protect US technology most importantly (lowering our trade deficit with them is a nonsense goal). In other words, …
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2 yr auction mixed but that’s an improvement
Even with the possibility of a Fed hint at a pause after one more hike and the coincident change in market expectations for rate hikes next year, the 2 yr note auction was very mixed. The yield of 2.836% was spot on with the when issued. The bid to cover of 2.65 was below the one year average of 2.77 but direct and indirect bidders took a total of 65% of the auction, …
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Dallas mfr’g softens
The Dallas manufacturing November index slowed to 17.6 from 29.4 and that was 7 pts less than expected. It’s also the weakest print since July 2017. Production, new orders, backlogs, delivery times, employment, the workweek, wages and capital spending plans all fell m/o/m. Capital spending in particular is the slowest since April 2017. Coincident with the decline in …
Monday morning’s are tough
For markets and the short term direction (emphasis on 'short term'), it's pretty simple. With monetary policy, what will Vice Chair Rich Clarida say tomorrow and what will Powell discuss on Wednesday? With the real fed funds rate only back to zero, will they now buckle from their chosen path of achieving around a 3% fed funds rate sometime next year or will they …
Succinct Summation of the Week’s Events – 11/23
Positives 1) The average 30 yr US mortgage rate was little changed w/o/w at 5.16%, just off the 8 1/2 year high of 5.17% last week. Purchases did rebound by 3.1% w/o/w off the lowest level since February 2017 but they are down 4.8% y/o/y. 2) Existing home sales in October totaled 5.22mm, a touch above the estimate of 5.2mm and up from 5.15mm in September. The …
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Home sales and NAR joins Trump/Confidence
Existing home sales in October, likely reflecting contract signings mostly in the July thru September time frame, totaled 5.22mm, a touch above the estimate of 5.2mm and up from 5.15mm in September. The m/o/m increase though is off the lowest level since November 2015. Reflecting the slowing pace of housing transactions, the 3 month average is 5.23mm vs the 6 month …
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Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.