Almost a month ago, on October 7th, Hamas attacked Israel, and concerns of a much larger war in the Middle East spiked. War worries weighed on stock prices and irked the bond markets. With a few weeks to better assess the war situation and the many possibilities, the markets seem less worried. To wit, the […]
In the November FOMC statement, Chairman Powell and his colleagues at the Fed did as the market expected. Not surprisingly, in a unanimous decision, they left the Fed Funds rate at 5.25-5.50% and made minimal changes to the statement from the prior meeting, as shown below. The Fed continues to threaten another rate hike but, […]
The Bank of Japan’s (BOJ) policy meeting on Tuesday resulted in a shift away from yield curve control (YCC). Per the BOJ: “With extremely high uncertainties surrounding economies and financial markets at home and abroad, the Bank judges that it is appropriate to increase the flexibility in the conduct of yield curve control so that […]
The growth of the global economy and the value of the world’s financial assets are a function of interest rates. Interest rates are the cost of money. The cheaper money gets, the more investments into all sorts of assets make sense. Politicians and central bankers clearly understand this relationship. As we have seen since the […]
False narratives are stories market pundits tell to justify market actions. Sometimes, they are factual. Oftentimes, legitimate-sounding false narratives are incorrect. Yesterday’s Commentary took bond market false narratives to task. Specifically, one which claims foreign debt holders, specifically China and Japan, are selling sizeable amounts of U.S. Treasury bonds, which forces Treasury yields higher. We […]
The September NFIB Small Business Optimism Index (blue) fell to 90.8 from 91.3, remaining near the lowest levels since the financial crisis. The forward-looking NFIB business outlook (orange) dropped to -43. Such is above the low registered in mid-2022 but below levels reached during the financial crisis. 23% of small business owners deem inflation as […]
Shares of Coke and Pepsi were down about 5% on Thursday and trending lower as Ozempic and other obesity drugs become popular. Unfortunately for Coke, Pepsi, Mcdonald’s, and other companies, users claim they eat less food. Walmart confirmed initial reactions, saying its customers taking Ozempic and other appetite-suppressing drugs are purchasing less food. Drugs like […]
Amazon is facing an existing FTC problem that escalated last week. On Tuesday, the Federal Trade Commission and 17 state attorney generals filed a lawsuit against Amazon for anti-competitive practices in its online marketplace. According to the press release, The complaint alleges that Amazon violates the law not because it is big, but because it engages in […]
The Treasury bond yield curve has a near-perfect track record for predicting recessions. Inverted yield curves, when the yields on short-maturity bonds are greater than long-maturity bonds, are precursors to recessions. Yield curve inversions, however, are poor timing tools. The last four recessions started after an inverted yield curve un-inverted back to its normal positive […]