While REAL GDP for Q1 at 6.4% was just below the 6.7% estimate, the nominal GDP gain of 10.5% was well more than the forecast of 9.3% as the price deflator spiked by 4.1% instead of by 2.6% as estimated. Headline PCE prices jumped by 3.5% q/o/q. The core PCE q/o/q was higher by 2.3%, about as expected. Consumption rose 10.7%, helped of course by both the December …
A few things
Outside of the sharp rebound we're seeing in earnings, and impressive ones from big cap tach, we are also hearing more and more companies announce price increases on their products and services in response to their own growing price pressures. This was even the case with Facebook where most of its earnings beat came from a sharp rise in the average price per ad (of …
Biggest move in Treasuries today is…
The biggest move in the US Treasury market today is the almost 8 basis point jump in the implied inflation rate in the 3 yr TIP to 2.68%. That is 2 bps from matching the highest since 2008 and above that you have to go back to 2006 to see a higher level. Now the market could be wrong but even if we have this average inflation rate over the next three years, it is …
And the Fed says…
After acknowledging that “indicators of economic activity and employment have strengthened” because of “progress on vaccinations and strong policy support”, they are firmly committed to the belief that while “Inflation has risen”, it is “largely reflecting transitory factors.” I’m sure Powell will elaborate on this and give reasoning behind it, likely that his …
Not much ahead of the Fed
If only we can fast forward the day until 2pm because that's what we're waiting for with the 2:30pm press conference to follow. It certainly is an interesting balancing act for the Fed because they don't want policy to seem so out of step with the reality but at the same time they don't want a market tantrum in response to any possible change in tone. The 10 yr yield …
7 yr auction uneventful, and a good rant
The 7 yr note auction was uneventful, following mediocre auctions seen yesterday. The yield of 1.306% was in line with the when issued but the bid to cover of 2.31 was below the 12 month average of 2.37. Direct and indirect bidders took down about 78% of the auction, about in line with the one yr average of 77%. Bottom line, yields remain at the lows of the day …
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Home prices going vertical/Confidence/Mfr’g
Even before distorted covid comps kick in, S&P CoreLogic said its home price index in February rose 12% y/o/y vs 11.1% growth in January, 10.1% in December, 9.2% in November, 8.1% in October, 6.7% in September, 5.4% in August, 4.2% in July and 3.5% in June. Maybe someone will ask Jay Powell about this tomorrow. The 20 city index saw prices up by 12% y/o/y too with …
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Cap gains tax rates elsewhere/Some data
To the debate and ultimate fate of where the capital gains tax goes in the US, here are the individual rates overseas, according to PWC, which need to be compared to not just the US federal rate but also what the individual states charge. Denmark would be the only country that would have a higher rate than the US if the capital gains rate goes to 43.8% and then after …
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The auctions
Two Treasury auctions in the books today, the 1st was the 2 yr and the 5 yr just hit the tape. Both were somewhat soft. With the 2yr essentially pinned by the Fed, I’ll go over the 5 yr that has sort of broken free from Fed grips and QE. I say that because the 5 yr yield on December 31st was .36% vs .83% today. That is essentially a 50 bps rate hike. The 5 yr …
Dallas mfr’g/Components of note
I’ve pounded home the point for quarters now of the growing inflation pressures but what was missing in the data was a rise in wages. Yes, durable inflation maybe needs a rise in wages (I say maybe because I don’t see much higher wages in Venezuela and Turkey), which in turn companies try to recoup the costs of via a further rise in prices. But, higher wages are also …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.