The October US manufacturing and services composite PMI rose 1.2 pts m/o/m to 55.5 with services leading the way with its 1.4 pt increase to 56 while manufacturing was little changed at 53.3 vs 53.2. The headline index matches the best level since July 2018 but remember is only measuring the direction of improvement, not the degree. With services Markit said “The …
Inflation expectations/Some data
As my readers know, I've pointed out the importance of watching the 30 yr Treasury bond as the best messenger of market signaling since it's furthest out on the curve away from Fed manipulation. Yesterday, the implied inflation rate in the 30 yr TIPS rose for the 6th straight day by 2 bps to 1.89%, the highest level since May 2019. Central bankers are going to have …
Approaching key level
As seen in this chart of the 10 yr Treasury yield, you can see we are approaching the 200 day moving average of .87%. If we trade above it, it would be the 1st time since December 2018 that we did. I know many will say that rates are still so low, which of course they are, but it’s the rate of change that should now be a focus. The 30 yr yield is already thru its 200 …
Existing home sales at 14 yr high
Existing home sales in September, likely reflecting most contract signings in the June thru August time frame, totaled 6.54mm, above the estimate of 6.3mm and up from 5.98mm in August. That is the most since May 2006 with a rise m/o/m in all 4 regions. With the decline in the number of homes for sale, months’ supply fell to just 2.7 from 3.0, the lowest in data going …
Claims data, CA finally gives actual #s
Initial jobless claims fell to 787k from 842k last week (revised from 898k) and that is well below the estimate of 870k. Also positively, continuing claims fell to 8.37mm from 10mm and that was less than the forecast of 9.63mm. Helping to explain the large deviation from the estimate and last week’s revision is due to California which after weeks of only estimating …
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Sentiment/Europe
Yesterday Investors Intelligence said Bulls rose to 59.2 from 56.6 while Bears fell to 20.4 from 21.2 and I would consider this just shy of very stretched. Bulls above 60 are extreme so we are just about there but mid teens in Bears is their version of extreme. Either way, a spread of almost 40 is a red flag in the short term from a contrarian perspective. With …
Rates/Energy/Some data
A closing 10 yr yield with an 8 handle would be the first time since June and I believe will continue to move higher. A 1% yield is possible soon if a fiscal deal gets passed. The 200 day moving average is .87%. The 30 yr yield is already above its 50, 100 and 200 day moving averages and is at 1.61% today. There will be no free lunch with trillions of dollars of …
Housing starts, single family keeps on
September housing starts totaled 1.415mm, 50k less than expected and August was revised down by almost 30k to 1.388mm. The slippage from the estimate and in the revision was all in the multi family category as single family remained strong and as seen in the ebullient NAHB figure yesterday. Single family starts grew 8.5% m/o/m to 1.108mm from 1.021mm in August and …
Commodity price inflation
I've expressed my bullishness on commodities as part of my expectations for higher inflation in the coming year. Yesterday the CRB Food index closed yesterday at just under the highest level since August 2019 and based on where corn, soybeans and wheat are trading this morning, will likely close above today. Soybeans in particular are trading at the highest since …
Sentiment is ebullient
The NAHB October builder sentiment index rose 2 pts m/o/m to a robust 85. The estimate was for no change. This is another fresh record high. Present Conditions are now at 90 out of 100 with 50 being the breakeven. That is up 2 pts from September. The Future Outlook was up by 3 pts to 88 while Prospective Buyers Traffic was unchanged at 74. The NAHB said “Traffic …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.