US Economy


Inside the US junk bond sell-off

From Moody’s: Fewer Defaults Will Stave Off Much Wider Spreads The high-yield bond market recently incurred a jarring sell-off. On October 24, the composite speculative-grade bond yield and its spread over Treasuries bottomed at 5.46% and 340 bp, respectively. By November 15, the spec-grade yield had jumped up to 6.13%, while the spread swelled to


Markets boom as Trump tax cuts rush ahead

DXY firmed overnight: AUD was soft against DMs: And weak against EMs: Gold fell: Brent too: And base metals: Big miners caught a bid: EM stocks took off: Junk snapped back: US yields climbed, the curve flattened: German yields did nothing: Stocks roared: Data was pretty good in the US with strong industrial production, builder


Risks to the mighty bull

DXY fell sharply Friday as Trump tax headbutting goes on: AUD was even weaker against DMs as the RBA paralysis sinks in: Against EMs, AUD was mixed: Gold got smacked, oddly: Brent was firm: Despite the jump in US oil production and the rig count from 729 to 738. More to come on that front:


Trump tax delays trigger sell-off

I’ve missed this update all week owing to flu. Some interesting stuff is going on. Last night, DXY fell sharply: AUD was stable anyway against DMs : But not as weak as EMs: Gold firmed: Brent too on Saudi tensions: Base metals fell: Big miners were hit: EM stocks eased: Junk bonds fell sharply, especially


Trump tax cuts all for the 1%

From Nouriel Roubini at Project Syndicate: US President Donald Trump, in partnership with congressional Republicans, is pursuing tax cuts that will blow up the fiscal deficit and add to the public debt, while benefiting the rich at the expense of middle- and working-class Americans. Once again, Trump has not hesitated to betray the people he


No surprise: Trump Administration’s Tax Plan to blow Budget deficit

Fitch Ratings has released an analysis of the Trump Administration’s tax reform proposal, which estimates that while growth would receive a short-term sugar hit, the US’ “structural” Budget deficit would also expand, lowering long-term growth, in addition to increasing inflationary pressures and causing monetary tightening: Such reform would deliver a modest and temporary spur to


US jobs preview

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for October. A key question is how much did hurricanes Harvey and Irma impact employment in September – and how much will employment bounce back in October. Merrill Lynch economists expect the following: We forecast that nonfarm payrolls increased


Fed gets set to hike again

DXY was firm last night: So was AUD, largely just tracking a big bounce in the NZD after good jobs data: EM currencies were strong: Gold firm: Brent fell: Base metals just won’t quit: Big miners roared: EM stocks hit new highs: High yield fell: US short end yields jumped. The long end fell. The


Markets shudder as US yields climb

DXY fell a little last night as it waits for Trump tax rocket juice: But that could not save the AUD which plunged against USD And EUR: And EMs: Gold was soft: Brent firm: Base metals still smokin’ the crack: Big miners not! EM stocks gave out another warning: High yield was soft: US yields


Fed hawk now favourite for chair?

Via Dow Jones: President Donald Trump asked Republican senators for a show-of-hands poll on two candidates he is considering to be the next chairman of the Federal Reserve. Senator Tim Scott said the President, who was on Capitol Hill at a Senate GOP caucus lunch, asked the group which candidate they preferred to lead the


Welcome to the bubble in everything!

DXY was again right at the break out point of its very neat head and shoulders bottom: AUD was pounded lower for which have to thank Jacinda Ardern as the NZD was crushed: EMs were also weak: And gold: Oil was firm: Base metals are still chiming stupid o’clock EM stocks are still warning: High


US senate passes budget in tax reform boost

Via The Guardian: The Senate has approved a multi-trillion dollar budget that Donald Trump has called a “first step towards massive tax cuts”, a largely symbolic move that sets the stage for Republicans to rewrite the US tax code without a single Democratic vote. The Senate voted 51-49 to pass the budget resolution, a blueprint


Captain Glenn turns doomsayer on global inflation

Via Captain Glenn in his new role as hedge fund seer: Former Reserve Bank of Australia governor Glenn Stevens says global investors have become complacent about the risks of a sharp rise in inflation that would have “considerable implications” for financial markets. An unexpected pick-up in inflation measures could see “markets flip from their current


New record highs for stocks

DXY launched last night then lost the lot. The chart remains bullish: AUD was weak against DM: But strong against EM: Gold was soft: Brent was firm on US hurricane outages and OPEC output cut extension talk (a certainty): Base metals were mixed: Big miners were crushed by Xi Jinping: EM stocks rebounded: High yield


Who is the new Fed chair?

BofAML on the contest of contests: Contestant #1: Kevin Warsh Kevin Warsh is a lawyer by trade, who is currently a distinguished visiting fellow at the Hoover Institution and lecturer at Stanford. He was a Fed Governor from 2006 to 2011, which was the heart of the financial crisis. Prior to the Fed, he worked


More record highs for stocks

DXY pulled back last night: AUD stabilised versus EMs: But fell against EMs: Gold held: Brent was whacked: Base metals rallied: But not big miners: EM stocks held: High yield is stable: US yields pulled back: European spreads contracted: And US stocks hit more record highs: It’s a pretty normal pullback following Trump tax excitement. There’s