- Fed Balance Sheet (WALCL): +2.2B (+0.03% w/w). neutral.
- Total Bank Credit (TOTBKCR); +24.9B (+0.14% w/w); expansion.
- 30 Year Mortage Rate (MORTGAGE30US); 6.95% (-8 bp w/w); stimulus.
- 10 Year Treasury (DGS10); 3.94% (-29 bp w/w); almost a full point (100 bp) drop in 8 weeks; stimulus.
- CPI All Urban (CPIAUCSL): +0.10% m/m. “no inflation”. (Well, except in services).
- Producer Prices (PPIACO): -0.48% m/m. Lower energy prices = “deflation”.
- Industrial Production (INDPRO); +0.24% m/m; still down from the highs.
- Retail Sales (RSAFS); +0.28% m/m; new all time high.
- Strategic Petroleum Reserve (WCSSTUS1); -6k (-0.0% w/w); slight drain.
Retail sales were strong, industrial production is moving sideways, and yields continue to plunge, driven by Wednesday’s Fed meeting, where Powell hinted at rate cuts for 2024 – just in time for the upcoming election cycle. Prospects for a Fed’s rate cut caused various assets to scream higher on Wednesday, along with gold and silver, while the buck was driven lower. This was later walked back by NY Fed Chair Williams on Friday which caused some reversal, but not all that much:
Fed’s Williams douses Wall Street’s rate-cut speculation (Source – Pfizer/Reuters); “We aren’t really talking about rate cuts right now,” New York Fed President John Williams said in an interview with CNBC. When it comes to the question of lowering rates, “I just think it’s just premature to be even thinking about that….”
I guess the market moved more energetically than the Fed wanted it to, and so they sent out Williams to calm things down. Not like they’re control freaks or anything.
US Treasury Rates moved lower this week; after the “higher for longer” blabber for months, this week we heard (suddenly) about Fed rate-cutting-projections for 2024, which drove the 10-year down 29 bp, and the 1 year down 18 bp. But rates have been heading lower for 8 weeks now – perhaps the banksters knew what was coming in advance? They sure are better connected than I am. I should know by now – big money always moves in advance of events.
Note that TLT (which is basically the 20-year) had a 19% capital gain over the past 8 weeks. Now apply a pile of “unrealized (capital) gains” to all the bankster balance sheets who were stupid enough to buy the 10 year when it was yielding less than 1% back in 2020.
by bsv