Read on the Trading Floor - 17 Oct 2023
Today’s focus… US exceptionalism
Macro Themes At Play
Theme 1 - Never bet against the US consumers' willingness to spend
Despite the fall in housing activity, Michigan consumer sentiment disappointing, covid savings dwindling, rising cost of credit and higher prices, we got another healthy print from the US consumer this afternoon... Retail Sales at 0.7% vs exp 0.3%. Households are demonstrating little restraint after an historic rate hike cycle from the Fed. The US economy is showing sufficient strength to back the Fed's higher for longer stance, with the Atlanta GDPNow estimate back up to 5.4% annualized rate.
Retail sales was followed by better-than-expected Industrial Production (Reuters). Duration sold off with US10s topping 4.8% and back to 2007 levels, 30year approaching 5% whilst 2yr yields hit 5.2% for the first time since 2006 (Reuters). However, it is interesting to see limited gains for the USD despite the aforementioned rates move, whilst US equity indices have held in relative to the fixed income move. The market now waits to hear from Powell on Thursday at the NY economics club.
Some of the key pieces consumed on Harkster.com following this afternoon's main data release
ING - US retail sales confirms 4% GDP growth is on the cards
WSJ - Retail Sales Get Real
Bloomberg - Long-End Treasuries Hit by Wildest Swings Since 2020 Pandemic
JP Morgan - FICC Market Structure: Top of Mind Themes for Q4
The Capital Spectator - 10-Year US Treasury Yield ‘Fair Value’ Estimate
Advisor Perspectives - The Big Four Recession Indicators: Industrial Production Rises for Third Straight Month
Brent Donnelly - All Bonds, All the Time
UBS top of the Morning - Top of the Morning: CIO Strategy Snapshot
MishTalk - Big Surge in Retail Sales Will Put More Fed Rate Hikes on the Table
Theme 2 - US domestic arena
Focus maybe on the middle east but there is still a lot going on in the domestic arena in the US, as bank earnings top low expectations, UAW strike becomes entrenched, House leadership vote goes to the floor and of course we inch towards the next US debt ceiling deadline.
Earnings - BofA and Goldman's
WSJ - Bondholders Become Less of a Burden at Bank of America, Other Big Banks
FT - Goldman Sachs profits drop 36% after pullback from retail banking
FT - Goldman chief David Solomon calls time on high-profile DJ gigs
UAW Strike - ticking along in the background, at risk of escalating further as demands are yet to be met, sides remain far apart
Axios - Ford Scion: UAW strike puts "future of the American automobile industry" at stake
WSJ - UAW Spares Carmakers Further Strikes, but Says More Could Come
WSJ - GM Delays Opening of Electric-Truck Factory Amid Cooling EV Demand
House - when will the Reps get it together?
FT - US House heads for knife-edge vote on Jim Jordan's Speaker bid
Axios - Inside the pressure campaign to get Jim Jordan the House speaker gavel
ZeroHedge - Jordan Faces Six (or more?) Holdouts For Speaker as Tuesday Floor Vote Looms
Reuters - Republican Jim Jordan's bid for speaker falling short in US House
WSJ - In a Chaotic House, the Next Speaker Must Unite These Three Factions
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Top Pieces
Discovered on Harkster.com
ING - Change of power in Poland should unlock investment potential of the economy
Robin Brooks - IMF Recap (succinct summary of the meeting with all the key themes... sourced from The Morning Hark)
- - Buy Bonds
- - TRYING TO EXPLAIN GOLD'S MOVE
- - Refocusing the Squirrel's Ag Positioning
- - False Utopia
Steno Research - The Great Game: Polish Election Shocker
ZeroHedge - VIX Is Primed To Surge Higher As Credit Cycle Turns
Reuters - Putin visits 'dear friend' Xi in show of no-limits partnership
The NY Times - U.S. Tightens China's Access to Advanced Chips for Artificial Intelligence
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