Back on March 10, the New York Fed’s attempt at real-time GDP forecasting predicted that the Q1 2017 estimate would be 3.2%. That would have qualified as another decent quarter, the second out of the past three and somewhat in keeping with “reflation.” As we know today, the advance figure calculated by the Commerce Department amounted to just 0.69% growth [...]
The internals of the GDP report were as ugly as the headline. The major source of weakness was what was supposed to be the sole source of strength – consumers. Real Final Sales to Domestic Purchasers, a measure of all goods and services Americans bought regardless of where they originated, increased by just 1.51% (quarter-over-quarter annual rate) in Q1. That [...]
Back in October, the Bureau of Economic Analysis released GDP figures that suggested what those behind “reflation” had hoped. After a near miss to start 2016, the economy had shaken off the effects of “transitory” weakness, mainly manufacturing and oil, poised to perform in a manner consistent with monetary policy rhetoric. The Federal Reserve had been since 2014 itching to [...]
The advance estimate for GDP is scheduled for release tomorrow, and by current estimates it should be a total washout. Yet another first quarter is expected to be a disaster, the fourth in a row and the third straight under the “residual seasonality” regime that was supposed to reveal the hidden economic strength obscured by recent winters. Unlike 2014, however, [...]
What was it that touched off CNY’s devaluation in the first place? When it started, “unexpectedly” of course, it was described as intentional policy designed to thwart speculators betting too heavily on the currency’s continued rise. But the first major move in the chess game between the PBOC and “whatever” it is driving the currency was to widen the daily [...]
On April 23, 2015, the US Treasury auctioned off $18 billion in inflation-indexed bonds maturing in April 2020. These 5-year TIPS stopped out at the lowest yield for that particular security class in almost a year before then. Coming as it did during the spring of 2015, it was met with the usual textbook applied commentary, where bond investors were [...]
According to the headline TIC statistics, foreign central banks have in the past six months sold the fewest UST’s since the 6-month period ended November 2015. That may indicate an easing of “dollar” pressure in the private markets due to “reflation” sentiment. They are, however, still selling. In February 2017, the latest month available, the foreign official sector disposed of [...]
The mainstream narrative as it relates to Chinese money is “tightening.” Having survived the economic downturn last year, we are to believe that the PBOC is once again on bubble duty. They raised their reverse repo rates, considered to be their policy benchmarks, three times up to mid-March. The central bank also increased the rate on its Medium Term Lending [...]
The Bretton Woods system was intentionally set up to funnel monetary convertibility through official channels. The primary characteristic of any true gold standard is that any person who wishes can change paper claims into hard money. It was as much true in any one country as between those bound by the same legal framework (property). What might differ were the [...]
The Federal Reserve’s complete change last year wasn’t something that happened all at once. There were several hints that a lot was going on behind the scenes that may never become public, including five years (now four) down the road when the full policy transcripts are released to the public. There was more interest in R* and secular stagnation, for one, [...]
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