A perfect storm may be brewing for the bond market as a combination of factors drive yields higher.
Macro Briefing: 28 September 2023
* Government shutdown looks increasingly likely as Sep. 30 deadline nears
* Workers union threatens to expand strikes at Detroit automakers
* Shares suspended in Evergrande, China’s troubled property development
* Oil futures rise to highest level of the year on Wednesday
* US durable goods orders unexpectedly rise in August
* US GDP Q3 nowcast continues to indicate strong acceleration in growth vs. Q2:
Risk-Off Odds Rising As Markets Retreat And Bond Yields Rise
Earlier this month I wrote that there was still room for debating if a broad-based risk-off signal was brewing. Three weeks later, the space is narrowing for keeping an open mind, based on several sets of ETF pairs for markets through yesterday’s close (Sep. 26).
Macro Briefing: 27 September 2023
* Senate passes spending bill to avert government shutdown, but…
* Odds are low that House will approve Senate’s stop-gap bill
* FTC and 17 states file antitrust lawsuit against Amazon
* Strong US dollar may be a new headwind for stocks
* China’s struggling property developer Evergrande misses another bond payment
* Consumer confidence in US slips for second month in September
* New US home sales fall in July to lowest level since March
* US home prices rose for sixth straight month, reaching new high in July:
Is The “Most-Anticipated” US Recession In History Still Lurking?
Late last year, and into early 2023, the crowd was all in on the inevitability of a US recession starting in the near future. A Bloomberg headline captured the zeitgeist as the new year dawned: “The Most-Anticipated Downturn Ever.” But as September draws to a close, the current business-cycle nowcast continues to indicate low risk as the economy chugs along.
Macro Briefing: 26 September 2023
* Moderate Republicans plan to work with Democrats to avert Oct. 1 shutdown
* Buying a home or car is “unaffordable” for typical American, says economist
* China and Europe try to reduce trade tension
* Nissan plans to sell only electric cars in Europe by 2030
* Soaring demand for critical metals raises ethical challenges for investors
* Biggest long-Treasury ETF plunges as bond rout deepens
* Texas manufacturing activity rebounds in September via Dallas Fed survey
* US economic activity slows in August: Chicago Fed Nat’l Activity Index:
Will US Stocks Continue To Outperform Global Markets This Year?
Market sentiment is turning cautious as several risk factors come into focus for the fourth quarter, but for the moment the lofty year-to-date performance premium for US shares relative to the rest of the major asset classes endures.
Macro Briefing: 25 September 2023
* Congress has one week left to avoid a government shutdown
* US economy set to weather four shocks in fourth quarter
* Oil prices rise amid tight supplies
* 3 reasons why bond yields keep rising
* US faces labor shortage for years to come
* Why isn’t interest expense a component in the Consumer Price Index?
* NY Fed’s Weekly Economic Index rises to 1-year high, but…
* US economic activity continues to stagnate in September via PMI survey data:
Book Bits: 23 September 2023
Mathias Döpfner
Adaptation via The Wall Street Journal
Creating a new trade architecture and redefining our relationship with autocracies wouldn’t simply be a form of damage limitation. It would also help us to avoid one of the biggest perils of our time: progressive and dangerously escalating deglobalization, and with it, a new and lasting rise of nationalism. Only when we proactively and jointly change our economic behavior will democracies truly prevail. The U.S. cannot go solo. If we let it happen or leave things up to the autocracies, we will either lose democracy, have to decouple unilaterally or be the ones being decoupled abruptly. In all cases the damage will be fundamental.
If we want to save democracy, we need a renaissance of truly free trade and a rebirth of “liberalism” in the spirit of Adam Smith. This is an American-European project. It can only be achieved together.
Treasury Market Plays Catch-Up With Higher-For-Longer Risk
The collective wisdom of the bond market for much of this year has been betting that interest rates would soon peak and fall. But those bets appear to be unwinding in the wake of Wednesday’s Federal Reserve meeting and press conference.