On August 30, the overnight SHIBOR rate jumped above 2.05% for the first time in more than a year. As the acronym indicates, SHIBOR is to Chinese RMB interbank liquidity as LIBOR is to eurodollars in London. In the summer of 2015, SHIBOR began rising steadily and often precipitously despite monetary policy “stimulus.” On June 27, 2015, the PBOC cut [...]
The UST GC repo rate was at or near 50 bps for the ninth consecutive trading day today, fixing at 50.5 bps. In what has become routine of late, DTCC reported on-exchange volume in UST was a paltry $37.3 billion, leaving the 20-day average of volume at just $51.4 billion – the lowest in a long time. Volume in MBS [...]
Speaking yesterday in Reno, Nevada, San Francisco Fed President (and CEO) John C. Williams delivered remarks on the normalization of monetary policy. So as not to put the cart before the horse, Williams noted that first the economy must do so before the FOMC can even consider the same for their self-assigned tasks. I’ll start with a quick overview of [...]
Factory orders rose in July in seasonally-adjusted terms from a downward revised June level. As has been the case with a number of economic data points this summer, that was a drastically different result than the unadjusted comparison. Since only the narrowest monthly interpretation makes it into most commentary about the economy, let alone manufacturing, the headlines leave a lot [...]
The Federal Reserve’s Labor Market Conditions Index (LMCI) fell to contraction again in August. After rebounding in July for the first positive reading of 2016, the LMCI dropped to -0.7 in the latest update. As usual, revisions have reshaped the levels of indicated problems throughout the past two years, but overall the trend remains. From this view of the labor [...]
Just a little over a year ago, the Institute for Supply Management (ISM) released its purchasing manager index for the services sector for August 2015. Though the level was down slightly from July, coming amidst the immediate aftermath of the “shocking” financial quakes starting in China and spreading to markets all over the world, the 59.0 non-manufacturing PMI was welcome [...]
The primary symptom of the economic malaise or depression that has developed since the Great Recession (which wasn’t a recession) is an economy that works less and thus earns less. Such a condition would suggest a shrunken system or at least vastly diminished potential. That much is well-established even in the orthodox literature though it isn’t ever talked about publicly. [...]
If the labor market were slowing as the wider perspective of the payroll reports suggest, then it would make sense to find increasing difficulties even among the few bright spots in this otherwise anemic economy. Yesterday and earlier it was reported increasing signs of slowing in real estate, both construction and resales of homes (particularly dwindling inventory). In the past [...]
In the technical notes for the Employment Situation Report, the payroll numbers that everyone obsesses over in fine detail, the BLS still shows a 90% confidence interval at 1.6 standard deviations that works out to +/- 115k. That means that whatever number gets splashed onto every headline and worked into every major commentary piece isn’t really the number of payroll [...]
Total construction spending was essentially flat year-over-year in July 2016. Public construction at both the state and local and also the federal government levels declined more than 3% Y/Y. Excluding the public sector, private construction spending (NSA) was up just 3.9% in July for the second month in a row. That was the lowest increase since the housing rebound started [...]
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