Fixed-income investors looking for interest-rate cuts from the Federal Reserve are still waiting, but that hasn’t stopped low-rated bonds from posting strong gains in 2023.
Author Archives: James Picerno
Macro Briefing: 21 September 2023
* House Republicans outline to avert government shutdown
* Federal Reserve leaves interest rates unchanged at 5.25%-5.50% target range
* Fed’s Powell says soft economic landing is ‘primary objective’
* Fed signals interest rates may stay higher for longer
* Policy-sensitive 2-year Treasury yield rises to highest level since 2006
* Hedge funds increase bets that oil prices will soon pass $100 a barrel
* Fed funds futures lean toward rate-hike pause in upcoming FOMC meetings:
Government Shutdown Risk – The Sequel
It seems like ages ago that the US government flirted with a shutdown, but it was only this past spring when Washington danced on the precipice. A repeat performance is again approaching as political dysfunction in Congress leads to another game of chicken with a Sep. 30 deadline for passing a spending bill.
Macro Briefing: 20 September 2023
* GOP infighting is driving the government toward a shutdown on Sep. 30
* Fed expected to leave interest rates unchanged at today’s FOMC meeting
* China’s demand for oil may peak by end of the decade
* Biden’s manufacturing agenda threatened by auto workers’ strike
* Disinflation denial is easily refuted with a careful review of the data
* US housing starts fall to 3-year low in August as building permits rise:
US Median Q3 GDP Nowcast Rises Above 3%
The government’s third quarter economic report appears to be on track to report that US output accelerated to 3%-plus, based on the median estimate via several sources compiled by CapitalSpectator.com. Although some forecasters are still warning that a recession is lurking down the road, the latest numbers strongly suggest that it won’t start in Q3.
Macro Briefing: 19 September 2023
* US national debt tops $33 trillion for first time, but…
* Federal debt as % of economy has fallen from pandemic high
* Rising oil prices threaten soft-landing scenario for Fed policy
* Central banks should keep interest rates high until inflation tamed, says OECD
* OECD lifts global economic outlook for 2023 but cuts next year’s growth forecast
* Obscure corners of energy world benefit from West’s sanctions on Russian gas
* US homebuilder confidence falls below neutral 50 mark in September:
US Stocks Still Lead Global Markets By Wide Margin In 2023
It’s been a strong year for American equities. Although US shares have been trading in a tight range recently, the market is holding on to the bulk of its robust year-to-date gain in 2023.
Macro Briefing: 18 September 2023
* House GOP agrees on short-term deal to keep government open through Oct. 31
* Debate continues on odds that Fed can engineer a US ‘soft landing’
* Country Garden’s struggle to survive is China’s biggest property crisis to date
* Peak rates are expected to be near for major central banks
* Rising number young adults have given up on owning a home
* Median US home sales price rose 3% in Aug vs. year ago–biggest gain since Oct
* Net 51% of US banks tightening lending standards–highest since 2020
* US industrial production rises more than expected in August
* NY Fed Mfg Index survey: firms “more optimistic” in Sep. for 6-month outlook:
Book Bits: 16 September 2023
Victor Haghani and James White
Summary via publisher (Wiley)
Over the past century, if the wealthiest families had spent a reasonable fraction of their wealth, paid taxes, invested in the stock market, and passed their wealth down to the next generation, there would be tens of thousands of billionaire heirs to generations-old fortunes today. The puzzle of The Missing Billionaires is why you cannot find one such billionaire on any current rich list. There are a number of explanations, but this book is focused on one mistake which is of profound importance to all investors: poor risk decisions, both in investing and spending. Many of these families didn’t choose bad investments– they sized them incorrectly– and allowed their spending decisions to amplify this mistake.
10-Year US Treasury Yield ‘Fair Value’ Estimate: 15 September 2023
The US 10-year Treasury yield continued to trend higher in August, rising further above CapitalSpectator.com’s “fair-value” estimate, which is based on averaging three models. It’s unclear if the mean estimate is wrong or the market’s experiencing an extended run of irrational exuberance. Perhaps it’s a bit of both. In any case, the widening spread in the market yield over the model’s estimate is striking from a historical perspective.