Today - Tuesday, May 5, 2015
- Following the explosion in the trade deficit in March, Goldman Sachs cuts its Q1 GDP tracking estimate to -0.5% from +0.2%. In its first estimate last week, the government said Q1 GDP growth was 0.2%.
- Calendar check: We're five weeks into Q2. It's resolved that Q1's performance was lame. At issue is whether the expected Q2 bounce occurs.
- Previously: Atlanta Fed: Q2 GDP bounce not assured (April 30)
- The German 10-year Bund yield was below 0.10% as recently as two weeks ago, but it's up another 11 basis points today to the relatively sky-high level of 0.50%, and dragging along the rest of Western bond yields.
- Italian 10-years are up 28 bps to 1.76%; Spain up 28 bps to 1.74%; U.K. up 14 bps to 2.0%.
- "The bond market meltdown goes on," writes SocGen's Kit Juckes, though he believes it to be more correction, rather than a trend change.
- In the U.S., the 10-year yield is up another three basis points to 2.18% - about its highest level of 2015.
- Previously: Bill Gross: Bunds are short sale of a lifetime (April 21)
- ETFs: TBT, TLT, TMV, TBF, EDV, TMF, TTT, ZROZ, TLH, SBND, VGLT, UBT, DLBS, TLO, BUNL, TENZ, ITLY, LBND, ITLT, GGOV, BUNT, DLBL, TYBS, VUSTX
- April US PMI Services Index: 57.4 vs. 57.7 consensus, 59.2 in March
- US Composite PMI 57 vs. 59.2 prior.
Monday, May 4, 2015
- Federal Reserve Chair Janet Yellen says that the Justice Dept. is joining in the probe of a leak of Fed meeting minutes to Medley Global Advistors in 2012 -- and that she was one of the Fed staffers in contact with the firm during that period.
- In her letter to House Financial Service Committee Chairman Jeb Hensarling, though, Yellen said she didn't leak confidential info.
- Medley sent a report to its clients in October 2012 including sensitive details of the September 2012 Fed minutes, one day before the rest of the world received them.
- Full Yellen letter
- Chicago Fed boss Charles Evans is sticking with the Fed line of Q1's economic weakness being transitory, but he's also sticking with his previously-help view that the risks from hiking rates too soon are greater than those of delaying any move until 2016.
- “It’s inflation that I worry most about. I think if we top out in this cycle with inflation not getting to 2%, that’s going to be a problem for us longer term."
- A voter on the FOMC, Evans remarks are the first by a Fed official since last week's minutes which showed the committee brushing off the weak Q1 and making no mention (at least in the policy statement) of the strong dollar.
- Full speech
- Previously: FOMC: Q1 slowdown "transitory" (April 29)
- Despite the rally in Treasurys this year, the 10-year yield was unable to take out its June 2012 low, leaving Jeff Gundlach (DBLTX, DSL) - presenting at Ira Sohn - wondering if we haven't already seen the bottom in rates.
- What to buy if rates turn higher? Not high-yield, says Gundlach, pointing to research showing a strategy of selling high-yield and buying Treasurys after the Fed begins hiking rates has been a winning one.
- What Gundlach is buying is Puerto Rican municipal debt - "they've priced in a lot of problems." 20-year paper is going for $0.78 on the dollar - a tax-free yield of 11%.
- ETFs: AGG, HYG, JNK, BND, BOND, HYLD, SJB, SCHZ, PLW, ANGL, LAG, GOVT, HYLS, UJB, XOVR, FBND, SAGG, QLTC, GBF, IUSB, TAPR, VBND
- U.S. companies have issued a record $39B of bonds in 2015 that mature in more than three decades, more than five times the amount sold in the same period last year, according to data compiled by Bloomberg.
- Oracle joined the fold this past Tuesday, selling $1.25B of securities due in 2055. Another notable is Microsoft, which sold its first 40-year bond in February.
- Treasurers are embracing what may be their last opportunity to lock in cheap long-term funding costs before the Fed raises rates, while investors are snapping up the longer-dated securities because they offer a higher yield over shorter-term debt.
- ETFs: HYG, JNK, LQD, HYLD, HYS, VCSH, SJNK, VCIT, VCLT, CWB, CORP, SJB, CSJ, BSJF, CIU, ANGL, BSJG, HYHG, CRED, LWC, BSJI, HYLS, CLY, SCPB, UJB, ITR, BSCF, BSCH, IGHG, WYDE, XOVR, BSJH, QLTA, THHY, HYZD, QLTC, BSCI, BSCG, SHYG, BSJJ, HYND, HYGH, BSJK, IBCE, FCOR, TYTE, IGS, COBO, BSCK, LQDH, SLQD, QLTB, IBCB, BSCJ, CBND, IBCC, BSCL, IBDB, LDRI, IBDD, IBDF, IGU, BSCM, IBDA, IBCD, IBDC, IBDH, SKOR, BSCO, BSCN, BSJM, IBDK, BSJL, IBDO, IBDN, IBDP, IBDQ, IBDM, IBDJ
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
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