FOMC and ECB policy divergence is set to return to convergence. We see an opportunity for December '19 Euribor to cheapen on the curve and December '19 Eurodollar to richen on the curve.... Read More
Credit cards remain the spending vehicle of choice for consumers, who have shunned home equity post-crisis. Growing balances and rising delinquencies among smaller banks are of concern.... Read More
Improving search trends related to real estate and housing point to a brighter outlook. Search trends in the auto sector bear watching. ... Read More
Today's topics include the trade war, searching for signs of recession, junk bonds, crude oil supply and demand, ignoring the Fed and the deterioration of corporate bonds.... Read More
The chart below shows the percentage of economies producing economic surprises (orange) and above-average data changes (green). We use Citigroup economic surprise and data change indices for 35 economies in total. Data change indices provide a very useful measure of... Read More
U.S. 5 and 10-year TIPS breakevens have produced their tightest 20-trading day range in history at a measly 3.1 bps. Remember inflation expectations have been steering Fed policy since the middle of 2017. The scatterplot below shows the... Read More
Q2 1018 earnings season gets underway this week. Earnings growth expectations are above 20% for the second time since 2010, while revenue expectations are their highest since 2011. Guidance is its most positive in about 20 years. With expectations so high, merely good results could be seen as a disappointment.... Read More
The chart below shows rolling three-month flows for ETFs focused on emerging markets. China and Brazil have seen buying interest fade after heavy inflows to start 2018. India has been the most fled emerging market heading into the summer months.... Read More
The markets are treating Trump's tariffs as a means to an end in ultimately eliminating trade barriers.... Read More
Technical analysts believe volume is a measure of conviction. Following this idea, one would expect to see higher volume (more conviction) with higher prices. Of the eight broad measures of dollar volume we examine, only investment grade corporate bond volume is in a clear uptrend.... Read More
Economic growth has slowed into the summer of 2018, but investors continue to believe low volatility conditions will persist. We are very closely watching the decline in the percentage of economies producing above-average data changes. Continued deterioration would be a surprise to investors as conditions would be most ripe for drawdowns and higher volatility.... Read More
ETF flows over the past month show the largest rotation into non cyclical sectors since September 2016. Technology has tended to outperform utilities over the month following similar rotations. ... Read More
A look at some interesting charts from the July 3, 2018 CoT report. ... Read More
Better than 90% of developed economies have increased fixed capital formation, which has a habit of marking cycle peaks. Search trends for an array of capital expenditures are beginning to slow, suggesting euphoric surveys are over their skis. ... Read More
We see potential for ECB rate hike timing to become pulled into the spring/summer of 2019. The longer-end of the U.S. yield curve is showing heightened sensitivity to ECB rate hike timing, meaning higher nominal yields would ensue. On the flip side, real yields in the U.S. will likely remain trapped in their trading range until wage growth finally shows up.... Read More
High expectations for capital expenditures are expected to temper given set-backs across soft economic data and emerging markets. Retailing, healthcare services, energy, technology, and software industries are at greatest risk.... Read More
WEEKLY DIGEST – THIS WEEK’S TOP POSTS Balance Sheet Reduction Ramps Up The Fed will increase the monthly total of Treasury proceeds withheld from reinvestment to $24 billion this month. August will mark the end of reliable monthly Treasury reinvestment... Read More
The volatility of inflation expectations has reached the lowest in recorded history, just ahead of a slew of inflation releases (AHE, PPI, and CPI). However bond investors will continue to see little excitement until pricing in headline inflation above 2.5% year-over-year for the years to come.... Read More