Friday, May 1, 2015
- "I think it would be very hard for the Fed to bump rates," The Oracle tells CNBC ahead of tomorrow's "Capitalist Woodstock." Not only does it appear the U.S. economy is struggling, says Buffett, but negative rates throughout much of Europe - about 25% of EU debt now trades with negative yields - make hikes here problematic.
- ETFs: SHY, BIL, VGSH, SHV, SCHO, DTUS, DTUL, SST, TUZ
- The overall PMI of 51.5 was flat in April from the previous month (and remains at the lowest in more than a year), but New Orders at 53.5 vs. 51.8 and Production at 56.0 vs. 53.8 both rose. Expectations for the overall gauge were 52.0.
- Supplier Deliveries 50.1 vs. 50.5, Backlogs 49.5 flat, Prices 40.5 vs. 39.0, Employment 48.3 vs. 50.0.
- Full report
- As has been the case for the past couple of weeks, Treasury yields want to go higher, no matter the news. The 10-year is now up six basis points to 2.09%. TLT -1.2%, TBT +2.4%
- ETFs: TBT, TLT, TMV, IEF, TBF, EDV, TMF, PST, TTT, ZROZ, TLH, SBND, VGLT, IEI, TYO, UBT, DLBS, DTYS, UST, TLO, VGIT, TBX, SCHR, TENZ, GSY, TYD, LBND, DTYL, ITE, DLBL, TYBS, DFVL, FIVZ, TBZ, DFVS, TYNS, SYTL
- President Obama and Republican leaders intensified their push Thursday to win backing for a Pacific trade bill after lawmakers warned of insufficient support in the House.
- Yesterday, Obama hosted about 30 pro-business Democrats eyed as a source of votes for so-called fast-track legislation, which would guarantee a later vote on the Trans-Pacific Partnership.
- The TPP would cover 40% of the world's economy, including the U.S., Japan and ten other Pacific nations.
Thursday, April 30, 2015
- The hot-handed forecasters at the Atlanta Fed see annualized GDP growth of just 0.9% in Q2, based on the limited data so far this month.
- Fans of economic prognostications will know this as the same group of PhDs which nearly exactly nailed the somewhat-shocking Q1 GDP growth of 0.2% (they forecast 0.1%, most everybody else was closer to 1% or higher).
- The FOMC yesterday brushed aside the thought of any prolonged slowdown, blaming "transitory" factors on Q1's lame performance. The Blue Chip consensus forecast is calling for Q2 GDP growth to be north of 3%.
- Showing a little respect for the Atlanta Fed, the 10-year Treasury yield dips a couple of basis points to 2.08%. TLT -0.4%, TBT +0.8%
- The average rate for a 30-year fixed-rate mortgage rose to 3.68% from last week's 3.65%, according to Freddie Mac's latest survey.
- The average rate for a 15-year fixed-rate mortgage inched higher to 2.94% from 2.92% in the prior week.
- A year ago, the respective rates for the 30-year and 15-year fixed were 4.29% and 3.38%.
- Bond yields have been headed higher for awhile - whether it be good or bad economic news - but they have an excuse to continue doing so after the Chicago PMI bounces back into expansion territory, hitting 52.3 in April from 46.3 in March.
- It's no surprise to economist Philip Uglow, citing the end of winter and west coast port strikes.
- Earlier, initial jobless claims fell to the lowest level in 15 years.
- The 10-year Treasury yield is up six basis points to 2.10%. TLT -0.6%, TBT +1.2%
- For those keeping an eye overseas, the German 10-year Bund yield is up another seven bps to 0.36% -- roughly a triple in yield this week.
- ETFs: TBT, TLT, TMV, TBF, EDV, TMF, EU, TTT, ZROZ, TLH, SBND, VGLT, UBT, DLBS, TLO, PLW, GOVT, BUNL, TENZ, LBND, BUNT, GGOV, DLBL, TYBS, TAPR
- The Bloomberg Consumer Comfort Index is 44.7 this week vs. 45.4 previous.
- "Regional shifts are evident this week, with the CCI dropping to 43.2 in the Midwest, down by 7.7 points, its second-largest weekly decline in the region since mid-1990."
- "I think they're going to raise rates once in 2015, if only because they want to prove that they can do it," Bill Gross said in an interview, stressing the Fed's possible increase in June is definitely "off."
- BlackRock, the world’s largest money manager, feels a September increase is more likely.
- Yesterday, the FOMC brushed off a Q1 slowdown as weather-related and transitory in its policy statement, but gave no indication whether a June rate hike is off the table.
- Previously: FOMC: Q1 slowdown "transitory" (Apr. 29 2015)
Wednesday, April 29, 2015
- The pace of job gains moderated, and the unemployment rate remained steady in the weeks since the FOMC last met in March, says this month's policy statement. While household spending declined, real incomes rose strongly - partly due to energy price declines - and consumer sentiment remains high.
- "The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."
- A sharp move higher in European yields is spreading to the States, where the 10-year Treasury yield is up six basis points to 2.06% despite news that GDP basically flatlined in Q1.
- Of course, we're already well into Q2 and most of the Fed is on record believing the Q1 growth slowdown to be an aberration already in the process of being reversed in Q2. The FOMC policy statement is due at 2 ET.
- The big action is in Europe, where the 10-year Bund yields have nearly doubled to 0.28%. Italian 10-year yields are up 16 bps to 1.5%, Spain up 13 bps to 1.45%, U.K. up 13 bps to 1.85%.
- TBT +3%, AGG -0.3%.
- Previously: More on GDP miss: Exports slide as dollar strengthens (April 29)
- Previously: GDP about flatlines in Q1 (April 29)
- ETFs: IEF, PST, EU, IEI, TYO, DTYS, UST, PLW, STPP, VGIT, GOVT, FLAT, TBX, BUNL, SCHR, GSY, ITLY, TYD, DTYL, ITE, ITLT, GGOV, BUNT, DFVL, FIVZ, TBZ, TAPR, DFVS, TYNS, SYTL
- March Pending Home Sales: +1.1% to 108.6 vs. +1% expected, +3.6% (revised) prior.
- "Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year," said NAR chief economist Lawrence Yun.
- Prices fell 1.5% during Q1 vs. a 0.1% decline in Q4. Excluding food and energy, prices increased 0.3% vs. 0.7% in Q4.
- Real personal consumption expenditures gained 1.9% during Q1 vs. 4.4% in Q4.
- Real nonresidential fixed investment fell 3.4% vs. an increase of 4.7% in Q4.
- Real exports fell 7.2% vs. an increase of 4.5% in Q4. Real imports gained 1.8% vs. a Q4 increase of 10.4%.
- Federal government spending up 0.3% vs. a decrease of 7.3% in Q4.
- Inventory changes added 0.74% to GDP after subtracting 0.10% in Q4.
- Real final sales - GDP less change in private inventories - fell 0.5% vs. an increase of 2.3% in Q4.
- Treasury yields aren't reacting a whole lot as most expected a weak print, and those same folks expect GDP to rebound for the rest of the year. The FOMC will no doubt discount the number as well (completing day two of policy meeting today). There's also the rest of the world, and yields are sharply higher in Europe today - with Germany's 10-year Bund rising a whopping seven basis points to 0.24%. The U.S. 10-year yield is flat at 2%.
- TLT -0.4% premarket
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