The recent pop in the 10-year Treasury Note’s yield—up about 40 basis points this month to ~2.4%–has inspired cries that the end is near. One Wall Street analyst lamented that the recent pop in this rate was a sign of rising inflation expectations and that this was something to worry about…NOW! He also recognized that the market’s repricing of Treasuries for higher yields also reflected a brightening economic outlook. But he couldn’t see that the two trends are, in fact, connected these days because the new abnormal continues to rule.
Housing’s Uneven Recovery In February
Is the housing market recovering? Yes, but it’s slow and uneven. That’s the message in today’s update for February housing starts and newly issued building permits. Residential construction continues to revive, and that’s a positive for the wider economy, although the revival is modest.
Strategic Briefing | 3.20.12 | Oil Prices
Oil Drops From Three-Week High on Speculation of Rising Supplies
Bloomberg | Mar 20
Oil dropped from the highest price in almost three weeks in New York on signs U.S. crude supply is rising and speculation that Saudi Arabia may boost output…. “The market is currently well-supplied with oil, but supply disruptions and looming supply shortage from Iran is keeping uncertainty high,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG (RBI) in Vienna who predicts U.S. futures will average $104 this year. “Without an intensifying Iran conflict, further price gains aren’t justified.”
A Big Week For Housing Reports
Late last year, I wondered if the housing market was finally in a recovery mode. There was a modest case for thinking positively then, and there’s been encouraging news so far in 2012. Will it last? This week’s scheduled updates on several housing measures may provide an answer.
Book Bits For Saturday: 3.17.2012
● The Race for What’s Left: The Global Scramble for the World’s Last Resources
By Michael T. Klare
Interview with author via Democracy Now!
We look at rising fuel costs, one of the major issues raised by the Republican contenders in the 2012 presidential campaign. Since the beginning of the year, the average of price of a gallon of regular gasoline has jumped 16 percent to more than $3.80. Earlier this week, President Obama partially blamed his Republican rivals, saying one reason for the increase is rumors of war with Iran. Meanwhile, Republican candidates have used the spike in gas prices to attack President Obama’s rejection of the Keystone XL tar sands oil pipeline and his stance on expanded domestic oil drilling. Our guest, Michael Klare, says oil prices are destined to remain high for a long time to come because most of the remaining oil on the planet is no longer easily accessible.
Industrial Production Flat In February But Annual Pace Turns Up
Industrial production was unchanged in February, the Federal Reserve reports. That’s bad. But the year-over-year pace for industrial production rose slightly—that’s good.
The New Abnormal: An Update
The market’s inflation expectations and the outlook for growth remain tightly bound. The new abnormal, in other words, rolls on. Implied inflation, based on the yield spread between the nominal and inflation-indexed 10-year Treasuries, continues to rise, right along with the stock market’s climb. This positive correlation dance confounds some pundits, although some simply ignore it. Recognized or not, this relationship endures, and it’s important to understand why.
Jobless Claims Drop To Post-Recession Low For A 2nd Time
New jobless claims dropped last week by a sizable 14,000 to a seasonally adjusted 351,000. That’s a post-Great Recession low, for the second time. Mid-February also witnessed the 351,000 level and the numbers are knocking on this door again.
Defending Milton Friedman’s Monetary Policy Prescriptions (Again)
Paul Krugman notes that Amity Shlaes has misinterpreted Milton Friedman’s legacy on monetary matters, as I did earlier this month. But then he loses me when he claims “that this time the Fed did all that Friedman denounced it for not doing in the 1930s. The fact that this wasn’t enough amounts to a refutation of Friedman’s claim that adequate Fed action could have prevented the Depression.” Huh?
The Beta Investment Report | US Bond ETFs (Broad) | 3.14.12
Here’s the second installment of our review of ETFs that can be used to replicate the Global Market Index, a passive, unmanaged benchmark that’s comprised of the major asset classes. In the previous edition, we looked at broadly defined U.S. equity funds. This time the focus is on the short list of investment-grade U.S. bond funds that cover the waterfront in this corner of the capital markets.