Greetings, United States: Rate futures are now pricing in an 85% chance of another 50 basis point cut at this month’s FOMC meeting (3/18). The market expects the US central bank to take the benchmark rate below 0.6% by early next year. Here is the recent history of emergency rate cuts by the …
The Daily Shot Brief – March 3rd, 2020
Greetings, United States: Supplier deliveries slowed as a result of China-related bottlenecks. Manufacturing activity indicators tend to get a boost from slowing supplier deliveries because they can be an indication of rising demand (suppliers can’t keep up). But that’s not the case this time around, suggesting that the regional Fed surveys and the …
The Daily Shot Brief – March 2nd, 2020
Greetings, Equities: Last week’s increase in VIX was one of the largest in recent history. The VIX curve backwardation was also unusually large. Here is the spread between VIX (1-month vol) and VXV (3-month vol). Commodities: Gold has decoupled from Treasuries. China: As we saw in the World Economics SMI report from a few …
The Daily Shot Brief – February 28th, 2020
Greetings, Equities: It took remarkably little time for stocks to correct 10%. The VIX futures curve: Credit: High-yield fund outflows have accelerated. Credit spreads are now much too tight relative to equity implied volatility. Here is VIX vs. investment-grade and high-yield CDX spreads. Rates: The whole TIPS curve (real rates) …
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The Daily Shot Brief – February 27th, 2020
Greetings, Equities: The number of S&P 500 stocks trading above the 200-day moving average is approaching 50%. Credit: Spreads between BB and BBB bonds are higher amid increased risk aversion. Rates: The market-based probability of three rate cuts this year is approaching 90%. Here is the market’s expectation for the fed funds …
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The Daily Shot Brief – February 26th, 2020
Greetings, United States: Despite the rising concerns about the coronavirus epidemic, US consumer confidence remains robust. However, the stock market weakness is likely to dampen consumer sentiment in the weeks ahead. In addition, credit card delinquencies at smaller banks continue to climb. Eurozone: The euro area ranks just below Asian economies in terms …
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The Daily Shot Brief – February 25th, 2020
Greetings, Alternatives: Most private equity managers are preparing for a market downturn. Rates: Equity risk premium and term premium have been correlated and are in a structural decline, partly driven by global quantitative easing. Commodities: Gold has been increasingly correlated to Treasuries, especially at the short end of the curve. The trend suggests that …
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The Daily Shot Brief – February 24th, 2020
Greetings, Equities: Stock futures are heavy in early trading (chart below) amid rising coronavirus cases outside of China (second chart). Rates: The Fed officials’ language has been a bit more hawkish. Energy: Did Russia pull a fast one on Saudi Arabia in the OPEC+ agreement on production cuts? Emerging Markets: EM …
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The Daily Shot Brief – February 21st, 2020
Greetings, China: Hong Kong’s CPI surprised to the downside amid soft demand. Japan: Pavilion Global Markets expects Japan’s stimulus measures to continue to be targeted at aiding household consumption and boosting public construction activity. Here’s a breakdown of the GDP growth by component. United States: The Philly Fed regional manufacturing report was …
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The Daily Shot Brief – February 20th, 2020
Greetings, United States: Residential construction continues to surprise to the upside. The January housing starts and building permits exceeded market expectations. United Kingdom: Real earnings are finally above the pre-crisis peak. China: Other than the count adjustment a few days ago, the number of new coronavirus cases has been slowing. Equities: …
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