The yield curve steepened as shorter rates fell as Fed Governor Christopher Waller reiterated his case for a July rate cut, while the data showed an improvement in consumer expectations for inflation. Treasuries trade on current and future inflationary expectations and according to the University Michigan Confidence Survey, consumers expect inflation to increase at an … Read more
The unexpected is continuing to occur. Retail sales rose by 0.6% after declines in the prior two months, exceeding all estimates. The 0.6% increase greatly exceeded the 0.1% estimate. Moreover, weekly jobless claims declined versus rising and import prices declined year over year as opposed to increasing. Furthermore, export prices rose versus remaining flat and … Read more
Equites were whipsawed on the rumor that the President floated the idea of firing FRB Chair Powell in a closed-door meeting with congressional Republicans. The President later denied that such occurred stating “No, we are not planning in doing anything,” when Trump was asked about if he wanted to fire Powell. The rumor originated from … Read more
Underlying inflation rose in June by less than expected for a fifth consecutive month. June also marks the fifth month since tariffs were imposed. What gives? As previously noted, companies have been able to shield customers by stocking up on inventories ahead of levies, as well as companies and countries alike have been absorbing increased … Read more
An emerging narrative is that monetary policy will take a backseat as the primary focus of the sovereign debt markets. It is perhaps beginning to be replaced by what is happening with budgets and national debts. Yesterday long dated Japanese debt sold off in dramatic fashion as the yield on its 30-year obligation almost broached … Read more
The six biggest banks are scheduled to release second quarter results this week. The trading operations are expected to stand out. Will there be any comments about the impact of the tariffs on their customers’ margins which will in turn will impact debt service requirements? Will there be increases in loan loss reserves in anticipation … Read more
Is a rotation occurring in the markets? At casual glance it appears some are taking profits in the companies that have performed best during the first six months of the year and buying the laggards from that same period. Bloomberg writes the biggest gainer thus far in July has been energy, which was the first … Read more
The markets are around where they were immediately after the election. Is this poetic justice as there were some who predicted the end of the world as we know it and continued to say the strangest things imaginable are being rebuked to those who swore of certain messianic achievements? On the surface it appeared that … Read more
There has been considerable attention focused on the narrowness of the advance from its April lows. Bloomberg writes the breadth is the worst on record going back to 1972, an ominous sign pointing to the massive concentration of wealth in a handful of companies, rising concern that any selloff could be potentially brutal for the … Read more
Equites declined and the dollar rose on a potentially volatile week as US trading partners attempt to finalize deals. Emerging market currencies slid as the President warned he will add additional tariffs on any country that align with “the anti-American policies of BRICS.” The Administration did signal however that trading partners may have until August … Read more
