Four economic reports this week:
- Auto/Light Truck Sales: -6.2% m/m, heavy truck sales: -11.9% m/m.
- Durable Goods: new orders -4.5 m/m, prior +5.1% m/m, shipments -0.1% m/m.
- ISM Services Index: 55.1 (flat = 50.0).
- PMI Manufacturing Index: 47.3 (flat = 50.0).
So ISM Services remains hot, there’s a contraction in manufacturing, durable goods could be topping out, auto sales weakened somewhat, but the heavy truck component of auto sales fell substantially.
Heavy Truck sales appear to be a leading indicator for recessions. Back in 2007, heavy truck sales fell off a cliff, and one year later, presto – we were in a recession. Curiously, same thing happened in September 2019 (“someone” knew the pandemic was coming?), as well as the recession-that-wasn’t in 2016, to a lesser extent. Now we see what might be the start of another similar move, which started in January 2023.
Rates moved higher this week, especially that 6-month treasury (+12 bp), which is now well above 5%. Looks like the market is predicting another couple of rate increases, but they think it might stop within 6 months, give or take. That’s just my read of the tea leaves.
The 10-year rose 13 bp this week, and may now be headed for a breakout above the previous high of 4.21%. This isn’t normal-recessionary behavior – normally money races into the 10-year during recessions, resulting in dropping 10-year yield rates. But not now. Does this mean “no recession”? Or is it something else? The easy answer: Big Money is terrified of buying long-dated government bonds and/or foreign holders are selling their collection – while they still can.
The master resource (crude) rose 3.36 [+4.40%] to 79.68. Crude has spent (roughly) the past 15 weeks tracking sideways, with the $80 price point acting as strong resistance. Currently crude’s trend is mildly positive. My guess: crude really needs a strong close above $80 to mark a reversal. Gasoline did much better, rising 0.17 [+6.55%] to 2.75, which is a new 15-week high. Natgas screamed higher, up 0.46 [+18.09%] to 3.01. Natgas appears to have put in a low.
Still no restart of the WEF/Biden-Handler thievery from the SPR, which is good news.
by mike-from-jersey 
