Goldman with the note: We estimate Congress will need to raise the debt limit by mid-October, though it is possible the Treasury might be able to operate under the current limit until late October. It is possible, though not likely, that the Treasury might be able to continue to make all scheduled payments until sometime
Goldman with the note: Treasury Secretary Yellen sent a letter to congressional leaders this morning (Sep. 8) indicating that the the Treasury will exhaust its cash and extraordinary measures “during the month of October”. This is in line with our expectations, though slightly sooner than the “October or November” timing that the Congressional Budget Office
Goldman with the note. There are now signs that the Delta wave is cresting, with a drop in the positivity rate over the last couple of weeks and a more recent decline in new hospital admissions. We therefore expect a job market rebound in coming months and have also offset part of the Q3/Q4 GDP
Goldman with the note: Sen. Joe Manchin (D-W. Va.) has attracted substantial attention with an op-edin the Wall Street Journal regarding his views on upcoming fiscal legislation. In it, he calls for a “strategic pause” on consideration of the $3.5 trillion/10 years budget reconciliation legislation, which Democratic leaders hope to assemble in committees over the
Goldman with the note: We estimate nonfarm payrolls rose 500k in August, below consensus of +725k. While the seasonal hurdle is relatively low in August, the monthly pace and cross-section of Big Data employment indicators are consistent with a sizeable drag from the Delta variant. On the positive side, we expect the reopening of schools
Morgan Stanley with the note: We are revising down 3Q GDP tracking to 2.9% from 6.5%, previously. Our forecast for 4Q GDP remains at 6.7%. The revision to 3Q implies full year 4Q/4Q GDP at 5.6% (5.7%Y) this year – 1.4pp lower than the Fed’s forecast of 7.0% in its June Summary of Economic Projections
Nothing good. BofA on the American experience: The Conference Board report yesterday revealed a sizable drop in consumer confidence to a six-month low of 113.8in August, down from 125.1 in July. The consensus was forecasting only a small decrease. The data echoed a similar slide in the University of Michigan sentiment index, which fell to
BofA with the note: Recent Covid developments have been somewhat encouraging. Weekly case growth in the US has dropped to around 5%. Cases appear to be at or close to the peak in some states–most notably Florida–that were hit the earliest and the hardest by the Delta wave. Yet we think the situation is likely
Goldman with the note: With the Supreme Court striking down the federal eviction moratorium and with most state-level restrictions set to expire over the next month, we explore how sharply evictions could rise under current policy, and we estimate the potential impact on the economy. Despite a severe recession, evictions actually declined during the coronacrisis
Morgan Stanley with the note: As Congress reconvenes, we expect progress to our base case of more fiscal expansion and identify key risks to our view. Recent news on spending plans offer hints on bill structure. We adjust our deficit growth estimates to~$1tr over five years and~$1.5tr over 10, but as low ramp in year
Is Fed taper coming or not? Goldman says it is. Or does it? The Fed’s Jackson Hole Economic Policy Symposium will take place this Friday. The theme of the conference is “Macroeconomic Policy in an Uneven Economy.” Chair Powell will give a speech on the economic outlook at 10am EST on Friday that will be
Nordea with the note: We generally had the feeling that the Jay-Man was a dead man walking within the Fed as Lael Brainard’s style and opinions suited the Biden administration much better than Powells, but suddenly it seems less clear that Brainard will take over the reins next year as Janet Yellen allegedly backs Powell.
It won’t be fast as we reopen next year into endemic COVID. Via Goldman: Economic activity: Our consumer spending tracker has declined moderately and now stands at 98.9% of the pre-virus level, down from an average of 101%in July. The softness in activity appears to be driven by renewed virus fears—53% of adults now ascribe
Morgan Stanley with the note: July jobs report delivers evidence of substantial further progress. The rates market took notice and bonds sold off hard with 10-year Treasury yields reclaiming the 200-day moving average. Equity markets took their cue from this move in rates with the Russell2000 up and the Nasdaq down. Cyclicals had their best
Credit Agricole with the note: The stronger than expected NFP report on Friday boosted the USD across the board as it seemingly helped the Fed move closer to QE taper and policy normalization. Indeed, the data likely alleviated some of the officials’ recent worries that a jobless recovery in the US could compromise their inability
Forex markets did as expected after good US jobs on Friday night. DXY took off as the Fed taper takes centre stage and EUR broke new lows: The Australian dollar was clubbed lower versus USD: Gold was poleaxed and oil is in trouble: Base metals never like the a strong DXY: Miners managed to hold
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for July. The consensus is for 900 thousand jobs added, and for the unemployment rate to decrease to 5.7%. There were 850,000 jobs added in June, and the unemployment rate was at 5.9%. This graph shows the job losses
TSLombard with the note: Households’ ‘excess’ savings haves urged globally in the midst of the pandemic, led by the US. American consumers’ surplus savings accumulatedsinceMarch last year ballooned to $2.4tn in June. But the boost toUSconsumption from households’ large savings buffers–whilst some of the largest globally–is likely to be short-lived and less than what headline
An excellent note from Nomura on exactly what we have been discussing for six months: The deviations between the Fed and the market’s economic sentiment and monetary policy outlook have become quite conspicuous, and we think that the two are likely to collide head-on in the near future. At this point, we expect the market
Goldman with the note. This is bullish for US growth, inflation and DXY deeper into 2022 and then beyond: Months after President Biden proposed major new spending programs financed with tax increases, the Senate finally looks poised to act on a bipartisan infrastructure bill and to take the first steps on a broader fiscal package.nIn
MUFG on the Fed this week: Fed in focus with USD set to remain supported as shorts are lightened USD: Fed tapering discussions “progressing”. The primary macro event this week will be the FOMC meeting on Tuesday and Wednesday and these meetings are increasingly important given we are gradually approaching the time of commencing the
Albert Edwards of Societe General with the note Many seem at a loss to explain the recent bond market rally in the face of higher-than-expected inflation data. Readers of these pages will not have been surprised, as the collapse in the credit impulse we have been highlighting was calling for just such a rally. More
JPM with the note: Just under a year ago, theFedcompleted its framework re-view and officially changed its monetary policy strategy to a flexible average inflation targeting (FAIT) approach. With the acceleration in inflation since then, PCE inflation now averages 2.0% over the past three years. Incoming months aver-age inflation over this three-year lookback period is
This debate matters a lot to H2 markets. There was roughly USD5tr in US fiscal stimulus in the second half of last year that won’t happen this year. This is an enormous growth headwind. But, of course, the private sector economy will be reopening at the same time, providing an enormous catch-up growth tailwind. Which
Morgan Stanley with a note on rising US wages. I agree that wages growth will be better this cycle than last owing to larger fiscal stimulus and faster growth but am still skeptical that it represents much inflation risk. Recent gains look like catch-up growth owing to temporary supply-side frictions. There’s plenty of underlying slack
It began with lumber prices a few weeks ago and it is now broadening out. Charts from Daily Shot. Goods prices are deflating as services catch up to normal levels: Core PCE has peaked: It’s mostly catch-up anyway: A long way to fall: Post-GFC saw the same panic: Panic fading: Structural inflation takes structural change:
Morgan Stanley with a note that I agree with: In our view, the announcement of a bipartisan infrastructure plan doesn’t augur a more modest price tag for fiscal spending. Rather, it underscores that the fiscal policy is better described as ‘all or nothing’. We note that several key Democratic Senators have already described their support
Goldman with the note. I see all the leftovers going into the Reconciliation bill, no worries: What a Bipartisan Infrastructure Deal Might Mean A narrow bipartisan infrastructure deal primarily focused on traditional infrastructure is looking more likely to win White House support. The spending it includes already looked very likely to become law, in our
While Australia’s treasonous government is hell bent on flooding the nation with foreign workers to overcome purported labour shortages, President Joe Biden has given an honest solution to employers: “pay them more”: The solution to the labor shortage is, according to President Joe Biden, as simple as a higher wage… He told journalists at the
Morgan Stanley with the note. Rate of change is the most important and misunderstood idea in macromarkets: Tapering is Tightening but Tightening began months ago. The Fed’s pivot to begin the tightening discussion caught most by surprise, but markets began discounting this inevitable process months ago in our view. It’s exactly what the mid cycle
