Posts Tagged ‘U.S. yield curves’

Notes From Underground: The Powell Fed Turns Transient From Transparent

May 2, 2019

May brought another Federal Reserve meeting that sowed more confusion. Maybe there is such a thing as too much transparency. The FOMC statement revealed the Fed thought “growth of household spending and business fixed investment slowed in the first quarter.” Coupled with this analysis was the OUTLOOK that “inflation compensation have remained low in recent months.”

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Notes From Underground: When Doves Coo

March 20, 2019

Wednesday’s FOMC statement and press conference was as dovish as we have heard in many moons. More importantly, the VOTE WAS UNANIMOUS. Even Kansas City Fed President Esther George voted with the group. Why was this dovish?

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Notes From Underground: It’s a Drag Listening to Draghi Get Old

March 7, 2019

ECB President Mario Draghi’s press conference was, once again, another act of flim-flam as he PIVOTED away from any tightening for the next [FILL IN THE YEAR]. There was NO SURPRISE as the TLTRO was well telegraphed various news outlets in recent weeks. What’s amazing is that the currency markets were surprised by Draghi’s press conference as the U.S. DOLLAR staged a sizable rally, reaching its highest level in more than three months. The YEN was stronger as the weak stock markets provided a sense of Japanese repatriation of invested capital, while GOLD performed dismally.

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Notes From Underground: Bye, Bye Pappy Van Winkle

December 6, 2018

At the end of 2017, my readers may recall that I did an unusual thing. I made a prognostication as where the 10-year yield will end the year. I said the 10-year would end the year at 3.41 percent, to which a friend offered up a bottle of Pappy Van Winkle bourbon if the rate reached that level. (The yield was 2.60 percent at the time.) Well, I’m throwing in the towel as it looks like 3.26 percent looks to be the top for the year. I guess I will have to enjoy a lesser-quality libation.

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Notes From Underground: The Summer Doldrums

July 10, 2018

There are storms brewing but for the moment markets are stuck in the Doldrums waiting for the winds to increase in velocity. The issues confronting the market are all too familiar as NOTES FROM UNDERGROUND has been categorizing for the previous months.

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Notes From Underground: The Tweets Controlling the Market Gyrations

July 1, 2018

Now that the first six months of the year have come and gone, the markets have a cacophony of events to look forward to as algos react to price, and fundamental macro analysts are trapped between WHAT OUGHT TO BE. The current concerns over tariffs, trade wars, strife between friends/allies, political uncertainty in Europe, Middle East conflagrations, the Russia/Saudi alliance on energy, Chinese growth concerns, RISING U.S. INTEREST RATES AND INCREASED QUANTITATIVE TIGHTENING (along with elevated TREASURY FUNDING NEEDS), decrease in capital inflows into emerging market economies leading to potential dollar funding concerns and U.S. Congressional elections. Yet, the markets remain are not pricing in the relevance of such concerns. Wise traders and investors do not fight markets but profit from the opportunities presented. To do otherwise is mere commentary. So to paraphrase John Maynard Keynes: When the facts change so do I, what do you do madam?

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Notes From Underground: The 10-Year Finally Hits 3% and It is Meaningless

April 24, 2018

The concentration of the media on round numbers is going to drive me to drink that bottle of Pappy Van Winkle. In true philosophical inquiry, round numbers never fit in the square pegs of the unbalanced thinking at Notes From Underground. In Tuesday’s post I am going to run through several points that I’ve mentioned over the past several months. All of these issues will have some relation to the developing narrative that we are experiencing in the markets:

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Notes From Underground: Strange Days Indeed

April 17, 2018

The market has several themes it is trying to digest, which made Tuesday’s price action interesting. Reported earnings have been as strong as whispered and with the Syrian bombing over the weekend, the markets had time to analyze the outcome (and as usual it was treated as a minimal event with no proliferation).

On Sunday night there was an immediate rally as the SPOOS gained 0.5 percent on the open. Strong earnings kept the rally in gear but what’s interesting that the financials failed to hold their initial rallies. This is important because most analysts were predicting significant growth in bank ROES, especially for the large Wall Street banks. Goldman’s FICC revenue increased by more than 20 percent as trading volatility provided an opportunity for one of the few remaining large prop shops remaining on the Street. The Goldman rallied fizzled and finished 2 percent down on the day.

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Notes From Underground: A Podcast With Futures Radio

April 12, 2018

On Monday, I taped a podcast with Peter Boockvar and Anthony Crudele, the host of Futures Radio. Anthony does a splendid job of getting to the crux of the investing mind. Enjoy the 36 minutes of conversation.

The yield curve continued to flatten and even Rick Santelli was able to question Professor Ken Rogoff about the FED‘s most recent efforts to raise interest rates. There are now voices raising concerns over the continued flattening of the curve, which will remain a theme here at NOTES. As tensions eased in Syria the GOLD gave back all of Wednesday’s gains while holding onto a slight increase for the week. The rise in short-term yields without any new political revelations allowed the U.S. dollar to rally. Enjoy the podcast and your weekend.

Notes From Underground: Does AnyOne Really Care About Jobs Friday?

April 5, 2018

The first Friday in April brings a key data point: the unemployment report. Of course, what most people are concerned about are THE AVERAGE HOURLY EARNINGS. The consensus is for AHE to increase by 0.3%, which is much better than February’s tepid increase of 0.1% rise. The focus on AHE has rendered the NFP growth a distant concern, especially as the participation rate suggests unemployed are returning to the job market. This calls into question how the FED model measures genuine SLACK in the jobs market. For the U.S., the unemployment rate is expected to be 4.0% with a net gain of 190,000 workers in the nonfarm payrolls.

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