1,315 results found
Daily Market Commentary
Few Fed meetings in recent memory have presented the FOMC with a more uncomfortable set of competing signals than yesterday’s. The Iranian conflict and its impact on oil and oil-dependent product prices have created the potential for an inflationary impulse, yet higher oil prices would likely slow economic activity, leading to higher unemployment. As if […]
Daily Market Commentary
The housing market is experiencing a widening imbalance between homesellers and homebuyers, with listings rising faster than demand. This is contrary to the post-pandemic period of extremely tight inventory and strong demand. Homeowners with ultra-low mortgage rates who were initially hesitant to sell are now increasingly selling. As shown below, the housing market is shifting […]
Daily Market Commentary
According to Bloomberg, Fannie Mae and Freddie Mac have been increasing the mortgages and mortgage-backed securities they hold on their own balance sheets. At their peak, before the financial crisis, Fannie and Freddie held a combined total of $1.6 trillion in mortgages. As we share below, courtesy of Bloomberg, their portfolio sizes are well below […]
Daily Market Commentary
Two weeks ago, Jerome Powell stated, “We may be approaching the end of our balance sheet contraction in the coming months.” In simple terms, as we wrote HERE, he is prepping the market for a quicker end to QT than was previously expected. While Powell was cryptic about why, the answer is obvious: liquidity concerns. […]
Daily Market Commentary
Chairman Powell spoke on Tuesday, addressing several topics. Of note was the following quote: “We may be approaching the end of our balance sheet contraction in the coming months.” The market interpretation is that QT is ending soon. As a reminder, QT, also known as quantitative tightening, has been in effect for over three years. […]
Daily Market Commentary
The First Brands Group, manufacturer of auto parts, including Raybestos brakes and FRAM, filed for bankruptcy on September 29th. This bankruptcy is troubling in two ways. First, per the ZeroHedge chart below, the price of First Brands loans fell by 80% in a day. In other words, the loan market had no clue of financial […]
Daily Market Commentary
The graph below, courtesy of the St. Louis Fed, charts the amount of money in the Fed’s overnight reverse repurchase agreement (ON RRP) facility. To understand why the current lack of a meaningful balance in the program could become concerning, let’s revisit the Fed’s response to the Pandemic. During the pandemic and global economic shutdown, […]
Daily Market Commentary
After years of abundant liquidity, U.S. overnight funding markets are beginning to show signs of strain. Interest rates on overnight repo agreements have climbed steadily this month as the Treasury rebuilds its cash balance and the Fed continues quantitative tightening. Usage of the Fed’s overnight reverse repo (RRP) facility, a key gauge of excess liquidity, […]
Daily Market Commentary
Another round of quarterly earnings reports has come and gone, and once again, many companies beat profit expectations. Yet a glance at the graph below from The Wall Street Journal, showing that retail sales have been flat excluding inflation, suggests that the ways in which companies are growing their earnings must be changing. The Wall […]