After flirting with an upside breakout for months, the US 10-year Treasury yield moved decisively to the upside in recent weeks and broke through a level that appeared to be a ceiling for much of the previous year.
Macro Briefing: 17 February 2022
* US says Russia’s claims of of troop withdrawal from Ukraine border are “false”
* Cease-fire violations alleged by Ukraine and pro-Russian separatists
* Fed minutes indicate central bank set to move ahead on rate hikes
* US homebuilder sentiment eased again in February but remains at elevated level
* Strong increase in US import prices adds to inflation pressure in January
* US industrial output rose in January, well above expectations
* US retail sales surged in January, rebounding sharply after weak December:
A Rough Year So Far For US Bonds With No Relief In Sight
After a run of rising interest rates in recent months, the usual suspects in the US bond market have taken a hit this year. With one exception, all the major slices of fixed income are posting losses in 2022, based on a set of ETFs through Tuesday’s close (Jan. 15).
Macro Briefing: 16 February 2022
* Russia says it’s withdrawing some troops from Ukrainian border, but…
* NATO counters that Russia is still increasing military buildup near Ukraine
* Investors betting on fastest pace of rate hikes since 2010 in developed markets
* China’s inflation slowed in January, opening door for more policy easing
* UK inflation remained at 30-year high in January
* Will Russia-Ukraine crisis drive US inflation even higher?
* Oil prices could spike further amid rising demand and supply constraints
* Surging lumber prices add nearly $19,000 to cost of building a new home
* US 10-year Treasury yield ticks up to 2.05%, highest level in 2-1/2 years:
US Growth Set For Sharp Slowdown In Early Q1 GDP Estimates
Economic activity is on track to post much slower growth rate in this year’s first quarter, based on preliminary estimates for gross domestic product (GDP).
Macro Briefing: 15 February 2022
* Kremlin talks up softer tone on Ukraine crisis
* German Chancellor in Moscow today to avert Ukraine war via talks with Putin
* Japan’s economic growth rebounded in Q4
* Fed’s Bullard: central bank needs to ‘front load’ rate hikes
* Is there still a case for investing in emerging markets? Maybe not
* China central bank expected to cut rates in coming months
* Intel expected to acquire Tower Semiconductor for $5.4 billion
* US inflation outlook slips for first time since Oct via NY Fed consumer survey:
Commodities Continued Rising Last Week, Topping Global Markets
A broad measure of commodities continued rising last week, delivering the strongest performance by far for the major asset classes, based on a set of ETFs for trading through Friday’s close (Feb. 11).
Macro Briefing: 14 February 2022
* German Chancellor visits Ukraine as anxiety of Russian invasion increases
* Ukraine calls for meeting with Russia to avert war
* A key US-Canada border crossing reopens after trucker blockade is cleared
* Russia’s invasion threat of Ukraine is pushing oil prices near $100 a barrel
* Perfect storm of rising demand and low supplies lifting commodities prices
* Will Fed’s increased focus on fighting lead to a US recession?
* Has Big Tech peaked as an investment theme?
* US consumer sentiment fell to 10yr low in February:
Book Bits: 12 February 2022
David Orrell
Summary via publisher (Icon Books)
Money has many apparently magical properties. It can be created out of the void – and vanish without so much as a puff of smoke. It can flash through space. It can grow without limit. And it can blow up without warning. David Orrell argues that the emerging discipline of quantum economics, of which he is at the forefront, is the key to shattering the illusions that prevent us from understanding money’s true nature. In this colourful tour of the history, philosophy and mathematics of money, Orrell demonstrates how everything makes much more sense when we replace our classical economic models with ones based on quantum probability – and reveals the explosive reality of what is left once the illusions are stripped away.
Research Review | 11 February 2022 | Financial Crises
Financial Cycles – Early Warning Indicators of Banking Crises?
Sally Chen (Bank for Int’l Settlements) and Katsiaryna Svirydzenka (IMF)
April 2021
Can the upturns and downturns in financial variables serve as early warning indicators of banking crises? Using data from 59 advanced and emerging economies, we show that financial overheating can be detected in real time. Equity prices and output gap are the best leading indicators in advanced markets; in emerging markets, these are equity and property prices and credit gap. Moreover, aggregating this information flags financial crisis many years before the crisis. Lastly, we find that the length of financial cycles is of medium-term frequency, calling into question the longer frequency widely used in the estimation of countercyclical capital buffers.