The Federal Reserve is widely expected to lift its target interest rate by 75 basis points tomorrow (Wed., Sep. 21). The question is whether the bond market has priced in the change? That’s a tough call until there’s deeper clarity on where inflation is headed.
Author Archives: James Picerno
Macro Briefing: 20 September 2022
* Wall Street is anxious ahead of another expected rate hike on Wednesday
* Policy-sensitive 2yr Treasury yield set to rise above 4%
* Rate hikes by central banks may bring ‘string of financial crises,’ says World Bank
* US arrests at southwestern border exceed 2 million in a year for first time
* Mortgage rates rise to new 14-year high
* Sweden’s central bank lifts policy rate 100bps to fight surging inflation
* US Housing Market Index (homebuilder sentiment) fell again in September:
Clean Sweep Of Losses For Major Asset Classes Last Week
Bearish expectations for growth, interest rates and inflation took another toll on markets around the world last week, based on a set of proxy ETFs representing the primary asset classes as of Friday’s close (Sep. 16).
Macro Briefing: 19 September 2022
* Biden reaffirms US defense of Taiwan if China attacks
* Pandemic is ‘over’, says Biden
* Markets eye another big rate hike from the Federal Reserve this week
* Rising bond yields change expectations for stocks
* Strong US dollar threatens to exacerbate a global economic slowdown
* Some European factories closing due to surging energy prices
* Hurricane Fiona batters Dominican Republic and Puerto Rico
* Millions evacuated in Japan as Typhoon Nanmadol strikes
* US 10yr Treasury yield rises for seventh straight week through Friday’s close:
Book Bits: 17 September 2022
Marian L. Tupy and Gale L. Pooley
Essay by author (Tupy) via The Spectator
By our count, abundance has been doubling every 20 years or so. So, a 60-year-old Westerner has seen his standard of living rise from one to two, from two to four, and from four to 8 in his lifetime. Too slow, you say? That’s the modern mind speaking. Prior to the mid-18th century, life remained pretty much the same for millennia and no one thought that unusual. Generations of people lived and died without seeing or experiencing even the tiniest of improvements in their lives. What’s more, the scope for future improvements is immense.
Desperately Seeking Yield: 16 September 2022
The dark side of rising interest rates is conspicuous near and far, but there’s also a bright side: higher yields, which are a byproduct of risk assets that take a beating in price, which in turn lifts trailing payout rates.
Macro Briefing: 16 September 2022
* World Bank sees higher risk of 2023 recession amid global rate hikes
* Putin admits China has ‘questions and concerns’ over Russia’s war in Ukraine
* China retail sales, industrial output rise more than expected
* US industrial output dips in August but manufacturing activity turns up
* US jobless claims fell for a fifth straight week
* Worker strikes on the rise amid new demands for pay raises
* Gold falls to 2020 pandemic levels as rate hikes take a toll
* Philly Fed Manufacturing Index fell in September
* New York Fed Manufacturing Index rebounds in September
* US retail sales picked up in August, posting upside surprise:
Monitoring Investment Trends With ETF Pairs: 15 September 2022
Risk-off sentiment is back, or so recent market activity suggests. Maybe risk-off never left. There are many ways to assess this state of affairs. Let’s check in on one that uses market data via ETF pairs for some real-time perspective, as of yesterday’s close (Wed., Sep. 14).
Macro Briefing: 15 September 2022
* Chin’s Xi and Russia’s Putin hold summit
* US rail strike averted after tentative deal is reached
* Policy-sensitive 2-year Treasury yield briefly tops 3.8%
* Mortgage rates top 8% for first time since 2008
* Demand for mortgages fall sharply as interest rates rise
* Higher rent prices are a key driver of inflation
* Wholesale inflation in US slips in August to still-high 8.7%
* California sues Amazon, alleging antitrust violations
* Business inflation expectations fell to 9-month low via Atlanta Fed survey:
Peak Inflation Watch: 14 September 2022
Inflation has probably peaked. The problem is that the slide from the peak is proving to be slower than expected, dipping at a glacial pace, if any, depending on the metric. Inflation persistence, in other words, is increasingly the new new worry.