Here is what Peter Boockvar wrote today as the world awaits the next round of monetary madness: The February NFIB small business optimism index moderated a touch to 105.3 from 105.9 in January and
Looking elsewhere within the report saw Plans to Hire fall 3 pts to 15%, the same level as November but up from 10% in October. Plans to Increase Inventory rose 1
On the inflation front, Higher Selling Prices
To this last point, the NFIB said “Many small business owners are being squeezed by this historically tight labor market. They are not confident enough to raise prices
Reflecting the rise in
Bottom line, hope is what has driven the
With the US 10 yr yield sitting at its highest level since September 2014 at 2.62%, Bill Gross we know is of the opinion that this is the breaking point that separates the end of the bond bull market or not (I believe it’s over and my readers know I’ve been saying that since August/September).
Sovereigns in Europe and Japan are also testing their recent high yields today. The JGB 40 yr yield is just 1.5 bps from a 13 month high. The German 10 yr yield is 1 bp from a 14 month high and the French 10 yr yield is 2 bps from a 1 ½ yr high. I remain bearish on these bonds.
We saw some mixed data out of China overnight where authorities combined the January and February levels in order to take out the Lunar holiday distortion. Retail sales in February ytd rose 9.5% y/o/y, below the estimate of 10.6%, down from 10.4% seen in December and the slowest pace of gain since December 2003. The blame is being attributed to a drop in auto sales y/o/y because of a new tax on small cars and off a higher base last year. Industrial production grew by 6.3% ytd y/o/y, a hair above the estimate of 6.2% and up from 6% in January. Also out was fixed asset investment ytd y/o/y which grew by 8.9%, a quicker pace than the 8.3% that was forecasted. Bottom line, fixed private investment and property continued to lead the Chinese growth but I’ll say for the umpteenth time, I have no idea what’s temporarily stimulus driven and what is organic. The Shanghai comp was unchanged but the H share index was higher by .6% after jumping by almost 2% yesterday.
Of note in Europe was the German ZEW March economic confidence expectations index rose to 12.8 from 10.4 last month, vs 16.6 in January and about in line with the estimate of 13. It stood at 6.2 in October. Current conditions did match a nearly 6 yr high. The comments from ZEW were somewhat mixed: “The fact that the ZEW Indicator of Economic Sentiment only shows a slight upward movement is a reflection of the current uncertainty surrounding future economic development. With regard to the economic situation in Germany, no clear conclusions can be drawn from the most recent economic signals for January 2017. While industrial production and exports witnessed a positive development, the figures for incoming orders and retail sales were less favourable. The political risks resulting from upcoming elections in a number of EU countries are keeping uncertainty surrounding the German economy at a relatively high level.” We can add the possibility of a BAT tax in the US to the list of uncertainties for German exporters. The euro is down a touch with the DAX flat.
Ahead Of Tomorrow’s Rate Hike
Ahead of the Fed hike tomorrow we see PPI today and CPI tomorrow. The energy driven headline number is expected to result in a 2.7% print tomorrow. I include one more chart before we hear from the FOMC. It is C&I loans and we can see clearly that they’ve plateaued here. Why? I’m not exactly sure yet.
- Source King World News