How odd is this economy? Two economic reports from last week, attempting to measure essentially the same thing, reported results that were so different they could be about two different countries. At 9:45 Wednesday morning, S&P Global reported their US Services PMI for July as 47.3 versus June's 52.7, a sudden and large one-month drop. When they reported the preliminary [...]
It was late on a Tuesday night, in the middle of last week, Christmas week of all weeks, with most people already checked out. Having finally obtained Congressional support and approval, the $900 billion plus “stimulus” (read: stipend) was on its way to becoming reality after months of politically-motivated uncertainty. Not one to sit idly by while everyone else had [...]
Crude oil futures continue to be more than a buck in contango in the most liquid part of the WTI curve out to three months. One of the more important anti-reflation indications, especially given the situation on energy’s supply side, hardly anyone cares about this glaring contradiction given this latest very minor sell-off in the bond market’s long end.That means [...]
For awhile there, a few weeks anyway, the 30-year US Treasury long bond had become the star of the mainstream show. Showered with its 15 minutes of fame, everyone loved how, for once, it seemed to agree with Jay Powell and the preferred narrative about the effectiveness of his technocracy. The idiocy of this attention was exposed by just how [...]
As I’ve said, it is a threefold failure of statistical models. The first being those which showed the economy was in good to great shape at the start of this thing. Widely used and even more widely cited, thanks to Jay Powell and his 2019 rate cuts plus “repo” operations the calculations suggested the system was robust.Because of this set [...]
Supply glut or demand disappearing? We are back to asking that question again after four years. In late 2014 and early 2015, the conventional answer was shale. The US had begun producing so much oil there was a glut of supply. Without an outlet for it, all the crude began building up primarily in Cushing, OK. All that was true [...]
Nervous people tend not to sit still. The term nervous energy means just that. When you’re worried about something, your mind is telling you to use up the resources your body is providing to search for a fix to whatever it is that’s bothering you. Mitigation at the very least. It really is a simple thing sometimes. In the UST [...]
In early February 1994, Alan Greenspan’s Fed would begin to raise the federal funds rate target for the first time in five years. Not since February 1989 had the FOMC thought economic conditions warranted an increase. In between, the 1990-91 recession which wasn’t especially bad, certainly not by contemporary standards set by the contractions in the seventies and early eighties. [...]
It’s seems like a very long time ago now, back on March 1 the UST curve un-inverted. While most have been focused on the 2s10s, it was the middle front of the yield curve which has been out in front signaling growing distress (liquidity hedging). The difference in yield between the 5-year note and the 52-week bill had tumbled throughout [...]
On Friday, the CFTC posted its COT data for the first week in 2019. For crude oil, capitulation. For US Treasury bond futures, capitulation. In the latter financial market, unsurprisingly the net market position utterly collapsed during December. From a relatively high (meaning market overall short) +58k contracts that last week in November when everyone piled into liquidity hedges, the [...]
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