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Tag Archives: Yield Curve

Monthly Macro Monitor: We’re Not There Yet

It’s been a slow turnin’ From the inside out A slow turnin’ But you come about   Slow learnin’ But you learn to sway A slow turnin’ baby Not fade away   Now I’m in my car I got the radio on I’m yellin’ at the kids in the back ‘Cause they’re bangin’ like Charlie Watts   Slow Turning by John Hiatt   “How did you go bankrupt?” Bill asked. “Two ways”, Mike said. “Gradually and then...

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The 10s Back To A 1-handle Again; New Information That Isn’t New

The benchmark 10-year US Treasury yield closed below 2% for the first time since Donald Trump was elected President. Having flirted with that level several times over the past week, today the most-watched interest rate on the planet finally breached this one startling round number. And it comes during a week which by every conventional account should have been hugely positive. Despite what has been called a trade truce between the US and China, the bond market has been unimpressed in every...

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Toward Rate Cuts: What If The Landmine Was Real?

It was supposed to be the Chinese government who was going to rescue the global economy. Once the rationalizations ended and officials around the world realized there was serious economic weakness building at the end of 2018 instead of a globally synchronized inflationary recovery, the green shoots of 2019 were going to be in one big part a fiscal stimulus boost. It didn’t happen over in China. From PMI’s to FAI’s, the Communist government remains largely absent. That’s the difference with...

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The Speed of Sour: LIBOR Now Inverted, Too

Last week, for the first time since February 2008, the LIBOR curve inverted. The 3-month tenor has been on the move downward for some time. The 1-month rate has been gentler in its slope. Last Thursday, the two finally crossed. As unnatural as inversion in the UST curve or elsewhere, it’s another sign of imminent rate cuts. I am somewhat reluctant to point out how it was on August 9, 2007, when this same thing happened for the first time last time around. It doesn’t mean we are repeating...

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Globally Synchronized (Bond Yields)

If you have nothing left, it can sound like a winning argument but you have to really try hard enough. In October 2015, with another false dawn dawning on the public, former Federal Reserve Chairman Ben Bernanke wrote and op-ed published in the Wall Street Journal. As had become his habit, it was full of praise – for his own work. Though he likely didn’t choose the title, it reflected his article nonetheless; and it tells you all you need to know about it. How the Fed Saved the Economy. How...

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Behind The Blame Game, A Nastier #4

After what is all but certain to be the final “rate hike” in this cycle, Bloomberg reported that President Trump had previously explored all possible legal ramifications of demoting Federal Reserve Chairman Jay Powell. The issue has become a major one, in the media, anyway, now that Mr. Powell has indicated his error. There will be no further hikes this year, rate cuts now pretty much a done deal from here. Given the situation, it’s at least understandable how no one is in much of a...

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Payrolls: Rate Cuts Not Of Their Choice

It’s never just one payroll report. The month-to-month changes in the Establishment Survey barely qualify as statistically significant, let alone meaningful. What that means is one good monthly headline is nothing to get excited about, just as one bad month shouldn’t get anyone too worked up. May 2019’s jobs report, however, isn’t in isolation. The headline for the Establishment Survey was +75k, well below expectations. On top of that, last month’s blowout (or what passes for one these days)...

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Bills, Beige, And the Consequences of the Disappeared Labor Shortage

Early last month, the Bureau of Labor Statistics (BLS) reported that the unemployment rate in the United States had fallen to just 3.6%. It was the lowest in half a century, seemingly an amazing feat for the most puzzling boom ever conceived. Everyone says it is going gangbusters, but is everyone saying so simply because everyone says so? This one statistic is the key piece of evidence for something more tangible. The problem is that it is not unassailable. There are flaws in its design,...

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