Wednesday, April 1, 2015
- The PMI fell to 51.5 in March from 52.9 in February, and vs. expectations for 52.5. New Orders fell to 51.8 from 52.5 in February. Production 53.8 vs. 53.7. Employment 50.0 vs. 51.4. Supplier Deliveries 50.5 vs. 54.3 (means deliveries are faster which theoretically means slowing activity), Prices 39.0 vs. 35.0, Backlogs 49.5 vs. 51.5, Exports 47.5 vs. 48.5.
- It's the lowest print for the overall PMI since May 2013.
- A perusal of the comments section shows the collapse in energy prices and the resultant slowing demand from oil & gas exploration and drilling is taking effect. There's also the weather (Winter. Who knew?) and congestion at West Coast ports mentioned more than once.
- Full report
- The 10-year Treasury yield ticks down further, now off 5 basis points on the session to 1.86% (it was already somewhat lower after the weak ADP jobs numbers).
- Short-term rate futures aren't pricing in a full 25 basis point rate hike until October even as Fed heads insist September at the latest.
- ETFs: TBT, TLT, TMV, SHY, TBF, EDV, TMF, TTT, ZROZ, SBND, TLH, VGLT, DLBS, BIL, UBT, TLO, VGSH, PLW, GOVT, SHV, SCHO, TENZ, LBND, DTUS, SST, DLBL, TYBS, DTUL, TUZ, TAPR
- Mar US PMI Manufacturing 55.7 vs 55.3 consensus, 55.1 in Feb.
- The ADP reported private-sector job gains of 189K in March, well shy of the 230K consensus. Revisions to February and January were minor, but December gains were revised to 276K from 241K and November's to 284K from 208K.
- The 10-year Treasury yield dips five basis points to 1.88%. TLT +0.7% premarket.
- Previously: ADP Jobs Report (April 1)
- Full report
- ETFs: TBT, TLT, TMV, IEF, TBF, EDV, TMF, PST, TTT, ZROZ, SBND, TLH, IEI, TYO, VGLT, DLBS, DTYS, UST, UBT, TLO, VGIT, TBX, GSY, SCHR, TENZ, DTYL, TYD, LBND, ITE, DLBL, TYBS, DFVL, TBZ, FIVZ, DFVS, TYNS, SYTL
Tuesday, March 31, 2015
- “Companies value secrecy and don’t want people doing analysis," says Martin Fridson. "The more they can keep investors in the dark the better it’s been for them.”
- More than 55% of speculative-grade debt sold this year was through deals known as private placements for life (144a-for-life) - thus requiring no public registration, according to S&P Capital IQ. That's up from 40% last year - a record until now.
- Fridson: “Deals are getting worse and worse for the investor, and they have been powerless to stop it ... The only winners are issuers and their underwriters."
- Source: Bloomberg
- Meanwhile, junk has risen back to the top of the fixed-income heap, returning 2.5% in Q1, topping investment-grade, muni, and U.S. government debt.
- ETFs: HYG, JNK, HYLD, SJB, ANGL, HYLS, UJB, XOVR, QLTC
- In what would be the longest winning streak in more than a decade, U.S. Treasury bonds are on pace for their fifth straight quarterly price gain, with the yield on the 10-year note of 1.95% comparing to 2.17% at the year's start.
- The last time the yield fell for five straight quarters was March 2001.
- Overall, the Treasury market has punched out a total return in Q1 of 1.48% following a return of 5.05% in 2014.
- The Fed is hellbent on tightening monetary policy, but - as good as long-term Treasurys have performed - the yield differential with the rest of the developed world continues to grow and continues to drive foreign money to U.S. shores. Ten-year Bunds are yielding 0.191%, 10-year Gilts 1.57%, and Spain and Italy 10-year paper yields less than 1.3%.
- The March employment report is set for release on Friday morning.
- Previously: Chicago PMI at the lowest level since 2009 (March 31)
- ETFs: TBT, TLT, TMV, IEF, TBF, EDV, TMF, PST, TTT, ZROZ, SBND, TLH, IEI, TYO, VGLT, DLBS, DTYS, UST, UBT, TLO, PLW, VGIT, GOVT, TBX, GSY, TENZ, SCHR, DTYL, TYD, LBND, ITE, TYBS, DLBL, DFVL, FIVZ, TBZ, DFVS, TYNS, TAPR, SYTL
- "I expect that, unless incoming economic reports diverge substantially from projections, the case for raising rates will remain strong at the June meeting," says Richmond Fed boss Jeffrey Lacker, doing nothing to shake his hawkish reputation.
- He says he's looking past some of the weaker economic numbers of late, and blames the strong dollar and lower energy prices for the slow inflation prints.
- Lacker is a voter on the FOMC this year.
- Full speech
- Giving his second speech on the topic since Friday, Fed Vice Chairman Stanley Fischer declared that regulators must better monitor and consider new rules for the growing proportion of lending being done within the shadow banking sector.
- "Non-bank firms and activities can pose the same key vulnerabilities as banks, including high leverage, excessive maturity transformation, and complexity, all of which can lead to financial instability," said Fischer.
- The Financial Stability Board stated in a November report that U.S. financial assets held by non-banks reached $25.2T in 2013, exceeding pre-crisis levels.
Monday, March 30, 2015
- More than $120M of home equity lines of credit were originated in 2014, according to Equifax, up 21.5% from 2013. A total of 1.2M HELOCs were opened last year, up 15.8% from 2013. Both 2014 numbers are the highest since 2008.
- Meanwhile, mortgage industry write-offs continue to slide, with HELOCs of 4.3 basis points down 32.9%, mortgages of 5.2 basis points down 30.1%, and home equity installment loans of 8.1 basis points down 17.8%.
- Source: Press Release
- February Pending Home Sales: +3.1% to 106.9 vs. +0.4% expected, +1.2% (revised) prior.
- "Pending sales showed solid gains last month, driven by a steadily-improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents," said NAR chief economist Lawrence Yun.
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