As Alan Greenspan’s rate hikes closed in, longer-term Treasury yields were forced upward as the flattening yield curve left no more room for their blatant defiance. By mid-2005, though, the market wasn’t ready to fully price the downside risks which had already led to that worrisome curve shape (very flat). While all sorts of bad potential could be reasonably surmised, [...]
As a follow-up to the post-October correlation in Treasuries, it’s worth reiterating how much more compelling the flattening curve has been given the full range of circumstances otherwise all lined up directly opposed to it. There has been: 1. Accelerating CPI.2. Higher oil prices.3. Looming rate hikes.4. Outwardly favorable labor data turbocharging expectations for even more aggressive rate hikes (and [...]
When Alan Greenspan sat in front of the politicians in Congress back in February 2005, he purposefully made it seem like what was taking place at that time was some kind of new and unusual development. Yeah, the guy who had previously become famous for fedspeak – the ability to use a lot of words while saying nothing – would [...]
It was the most common catchphrase of 2017, interest rates have nowhere to go but up. Maybe it was doomed from the start given that Alan Greenspan was among the more prominent commentators expressing this view. In his mind, the bond market was in a bubble and the party was already over. His successors at the Fed, following in his [...]
In the US Treasury market, the situation has been a little different. The BOND ROUT!!! theory posits that without the Fed to buy up additional supply, yields as a technical factor have to rise putting more upward pressure on rates than already exists from a booming economy. Add to that foreign selling in 2018, it left many expecting an epic [...]
July 2018 was another disappointing month in the housing market. Sales of existing homes, according to the National Association of Realtors (NAR), declined again last month. At a seasonally-adjusted annual rate of 5.34 million, it was the lowest level of resales in two years. Apart from the distortions last year in the aftermath of the big Gulf Coast storms, the [...]
It’s the kind of thing you’re supposed to overlook and not think too deeply about. Recall the basis of inflation hysteria: the economy was poised to take off and do so convincingly; that plus the ubiquitous LABOR SHORTAGE!!! meant that wages then inflation were going to break out higher; accelerating consumer prices were then to force the FOMC into a [...]
There’s nothing especially special about 2.62%. It’s a level pretty much like any other, given significance by only one phrase: the highest since 2014. It sounds impressive, which is the point. But that only lasts until you remember the same thing was said not all that long ago. Back last March, the 10-year yield had then, like now, broke above [...]
On Thursday, the Bureau of Economic Analysis (BEA) will report on Personal Consumption and Personal Income (as well as the difference between those two, the Personal Savings Rate). Accompanying the economic figures will be the usual estimates for consumer prices, in this case the Federal Reserve’s preferred inflation gauge the PCE Deflator. There isn’t expected to be much good news [...]
In October 2015, Federal Reserve Vice Chairman Bill Dudley admitted that the US economy might be slowing. In the typically understated fashion befitting the usual clownshow, he merely was acknowledging what was by then pretty obvious to anyone outside the economics profession. Dudley was at that moment, however, undaunted. His eye was cast toward the unemployment rate and that was [...]
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