So, the eurodollar curve has inverted. Bad news. Now what? While this is a major milestone in the monetary system’s decidedly anti-inflation/growth journey, it is hardly the end point of it. On the contrary, though it takes a lot of negative, deflationary potential to distort the curve in this way, we need to see if the market sticks with that [...]
Stop me if you’ve heard this before: dollar up for reasons no one can explain; yield curve flattening dramatically resisting the BOND ROUT!!! everyone has said is inevitable; a very hawkish Fed increasingly certain about inflation risks; then, the eurodollar curve inverts which blasts Jay Powell’s dreamland in favor of the proper interpretation, deflation, of those first two. Twenty-eighteen, right? [...]
Flatter. The yield curve continues to shrink in the important middle calendar spaces where growth and inflation expectations run the place. Treasuries have been doing this since around March, a peculiar (given monolithic mainstream reporting otherwise) eight-month reign of growing pessimism rather than inflationary confidence. Did the market foresee omicron more than half a year ago? No. That’s not really [...]
This sour/soar stuff goes back many years. The last time we went through the same hysteria (if for different reasons), everyone said the global economy was going to accelerate, take off, and sail onward forever after. The world was, they all claimed, set to soar.Globally synchronized growth. The bond market didn’t just disagree, it did so vehemently, a pessimism when [...]
When Japan’s Ministry of Trade, Economy, and Industry (METI) reported earlier in November that Japanese Industrial Production (IP) had plunged again during the month of September 2021, it was so easy to just dismiss the decline as a product of delta COVID. According to these figures, industrial output fell an unsightly 5.4%...from August 2021, meaning month-over-month not year-over-year. Altogether, IP [...]
Where is the “tantrum?” If there is one, to this point it has been historically minor changes limited to the shorter end of the yield curve between the 2-year and 5-year USTs. This section of it is more influenced by what the market believes Jay Powell’s Fed will do especially now that it likely will be Jay Powell’s Fed for [...]
At first, it was taken as a sign of relief, of strength and the return of good fortune. So many massive ships each overloaded with containers stacked skyward above their beams were headed to the West Coast, the ports there couldn’t handle the traffic. The boats, and the massive cargoes they carried, themselves packed into a sort of wondrously fascinating [...]
Picking up where we left off from our review of the first series of landmines, including the big one at the end of 2008, the world has been rocked by these things in almost continuous succession. Every couple of years, “everyone” says the world is recovering from the previous “unexpected” shock only to find instead how the global system ends [...]
For the first time since last December, the level of Job Openings (JO) pictured by the BLS’s JOLTS survey declined. End of the line for the economy?I am intentionally overselling this monthly minus. While the latest figure for September 2021 was indeed less than the one for August, if only because August’s estimate was raised by several hundred thousand. Going [...]
We already covered the yield curve’s reaction given today’s whopping consumer price levels. How about strictly inflation expectations in the market? TIPS, breakevens and such.Unsurprisingly, shorter-term breakevens (5s) jumped 12 bps to a new high of 308 bps (boosted considerably following the auction on October 21st). Pulling up the rest of the inflation “curve”, the 10-year breakeven added a “mere” [...]
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