Amusing stuff today. AUD is off the lows now: Bonds are well bid: XJO is threatening to break out as Trump declares a full blown trade war on China: Dalian is down hard: But Big Miners are up ex-FMG: Big Gas is flying: And Big Gold: And Big Scum: Big Puswad is a little more
Via the AFR: A US recession could occur within the next two years according to former US bond trader Charlie Jamieson, who says the flattening of the bond yield curve is a signpost of possible trouble ahead. Speaking on a panel on global macro at Livewire Live 2018, Mr Jamieson, executive director at Jamieson Coote
Some more good work from Damien Boey at Credit Suisse today: US inflation picks up a little further US headline CPI rose by 0.2% in May, taking year-ended headline inflation higher to 2.8% from 2.5%. Excluding food and energy, core CPI rose by 0.2% over the month, taking year-ended core inflation slightly higher to 2.2%
By Leith van Onselen While the Turnbull Government and the Business Council of Australia (BCA) continue to push the Senate to lower Australia’s company tax rate to 25% from 30%, the impact from the recent US corporate tax cuts continues to disappoint, sounding a warning signal for Australia’s senators. After it was revealed last month
While the world’s press is busy lapping up the anti-Trump hysteria post-G7, let’s stop and ask what did they expect? Via The Guardian: Donald’s Trump’s chief economic adviser said the US pulled out of a G7 communique because the Canadian prime minister, Justin Trudeau, “stabbed us in the back” and accused the leader of one America’s
EUR fell Friday night and DXY rose: The ludicrous EUR long pulled back but nowhere near enough: AUD rallied with risk: EM currencies are still in trouble: AUD shorts were roughly unchanged: Gold fell: WTI was smashed but Brent held on. The spread is huge now as shale oil floods the US but pipeline bottlenecks
Courtesy of Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus, according to Bloomberg, is for an increase of 190,000 non-farm payroll jobs in May (with a range of estimates between 155,000 to 220,000), and for the unemployment rate to be unchanged at 3.9%. The BLS
Via Elliot Clarke at Westpac: The minutes of a FOMC meeting typically hold little significance for the market. In this instance however, there is cause for a closer look. This is because the May minutes provide a clear assessment of the risks that the US currently faces, particularly with respect to inflation; financial conditions and
By Leith van Onselen The Federal Reserve Bank of New York (FRBNY) has released research examining “Home Prices, Housing Wealth and Home Equity Extraction”, which reveals that US home prices has finally rebounded above their pre-GFC peak: Home ownership has returned to is long-run (lower) ‘normal’ level: But like in Australia, has collapsed for younger
Readers will know for that since the global business cycle turned eight years old in 2017 I’ve been on end-of-cycle watch. This position is based upon the simple history of US business cycles which average eight years. Our own cycle is now very long in the tooth: For several years I have also looked to
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus, according to Bloomberg, is for an increase of 191,000 non-farm payroll jobs in April (with a range of estimates between 145,000 to 255,000), and for the unemployment rate to decline to 4.0%. The BLS reported 103,000
By Leith van Onselen While the Turnbull Government and the Business Council of Australia (BCA) continue to insist that reducing the company tax rate is essential to fuel investment, jobs and wages growth, the impact from the recent US corporate tax cuts continues to disappoint, fueling little more than a boom in share buybacks. From
DXY flew higher last night as EUR tanked. I reckon there’s another 5% in this move for both as the mad EUR long unwinds: AUD held on against DMs: EMs are breaking: Gold is at the brink: Oil looks toppy: Base metals are fighting a losing battle: Big miners too: EM stocks are breaking: EM
Via UBS: RMB-denominated oil contracts began trading for the first time in Shanghai on March 26. We believe that in the long term this will ultimately change how oil is traded globally, create a Petroyuan currency flow, increase the role of the RMB as a global trading currency, and compel investors to up their allocations to Chinese financial assets.
And excellent piece from FFWiley on the US business cycle: Media coverage of most business-cycle indicators waxes and wanes with changes in the economy, but so far in 2018, the yield curve indicator is all wax. It seems like everyone has something to say about the yield curve slope, and many commentators are jumping from a
Via Moody’s: Who to Blame for the Flattening Yield Curve The U.S. economy is humming along, but we believe that the economy will weaken and likely fall into recession sometime in 2020 as the boost from the fiscal stimulus fades. There is considerable uncertainty in the timing of the next recession, but the U.S. bond
By Leith van Onselen Treasurer Scott Morrison has confirmed that the Turnbull Government will persist with its policy of progressively reducing the tax rate for all companies, claiming they are essential to fuel investment, jobs and wages growth. From The AFR: “We’ve had significant success already in delivering tax cuts for small and medium-sized businesses
All he needed to do was shut up. DXY up: AUD down across the board: Gold off: Oil held on: Base metals were mixed: Big miners rallied: EM stocks too: And junk: The Treasury curve flattened: And bund curve: Stocks took off: Trump managed to shut up for a day and China announced some minor
Some nice MSM panic today via Reuters: Whether China is reducing its vast holdings of U.S. Treasury bonds is a persistent question in global markets, and the recent escalation in trade tensions between the world’s two largest economies means the question is increasingly on investors’ minds. The U.S. Treasury’s latest report on international capital flows
Just in case you thought China had the upper hand in the trade wars owing to US politics. I’ve circled the resignation of Gary Cohn and the launch of the China trade war: Certainly not a vote loser if not yet a clear winner: Just hit 50% in the Rasmussen Poll, much higher than President
DXY firmed Friday night: AUD was mixed: But EMs are weak: AUD CFTC positioning fell a little: Gold rose: Brent too: Despite a climbing US rig count: Base metals were mixed: Miners firm: EM stocks weak: Junk firm: Treasuries soft: Bunds strong: Stocks stable: Syrian missiles upset the apple cart but there does not seem
Via Moody’s: Profits Growth Curbs Defaults First quarter 2018’s earnings season has arrived. Though the annual increase of corporate revenues is expected to slow from its pace of 2017’s final quarter, operating income is expected to quicken. Tax cuts and the containment of labor costs help to explain the expected improvement in operating leverage, or
DXY rose last night: AUD was mixed against EM: And EM: Gold got flogged: And base metals: Big miners fell: EM stocks firmed a touch: But junk is sending an interesting signal as US warms up but EM turns cold: The Treasury curve flattened again: Bunds went the other way: Stocks rose firmly: The key
DXY was stable overnight: AUD pulled back: Gold jumped and has a bullish chart but couldn’t break out: Oil too but it did breakout on geopolitics: China’s PPI sat on base metals: Big miners did OK: EM stocks too: And junk: The Treasury curve keeps on flattening: And bund curve: Stocks eased: You could be
DXY was sold last night: AUD was roughly stable against DM: But strong against EM: Gold firmed: Oil too: Base metals were mixed: Big miners weak: EM stocks too: Junk was better: The Treasury curve flattened: And bunds: Stocks soared then flamed out: Everyone is a bear or bear in waiting now. Last night’s bid
DXY fell Friday night: AUD went risk off anyway: Not as much as EM forex: Gold lifted: Oil was hit as the US rig count jumped 11 to 808: Base metals were mixed: Big miners fell: EM stocks too: Junk held on: Treasuries were bid: And bunds: Stocks were walloped: Stocks should have done well.
That’ll decide it in the end. From The Hill: A strong majority of Americans believe the U.S. should take steps to correct its trade deficit with China, but a majority disapprove of President Trump’s proposed tariffs and there are fears that a trade war could damage the economy. According to the latest Harvard CAPS/Harris Poll, 71 percent
From Goldman: We estimate that nonfarm payrolls increased 200k in March, 15k above consensus. While we believe elevated snowfall will cause job growth to decelerate from the +276k average pace in the prior two months, labor market fundamentals remain solid and appear to have improved further. …we estimate the unemployment rate fell to 4.0% in March.
DXY was firm last night: AUD ripped: Gold fell: Oil rose: Base metals broke: Big miners too: EM stocks were off their worst: Junk too: Treasuries were dumped: Bunds bought: And recovered strongly from an early sell down: Last night did not start well as China listed its new trade war riposte, via the FT:
DXY rebounded last night: The Australian dollar was hammered against everything: Gold slumped: Oil too: Base metals were mixed: Big miners hit: EM stocks too: Junk eased: The Treasury curve was hammered: Bunds were bought: And stocks gave up a lot of yesterday’s gains: The WSJ has some nice perspective: …some investors are putting trade-war
