Last Week’s Positive Momentum Based on the Treasury Issuance Announcement Carried Over to This Week… The changes drove hedge funds and institutions from net short to net long, pushing yields down and giving equities a boost, in a week with few economic reports.
What it means— For the moment, 5% on the 10-year Treasury bond is kryptonite and 4,400 on the S&P 500 is a magnet. We are not sold on either one. 5% could be the near-term top on 10-year bonds and 4,200 might be the near-term bottom on the S&P 500 (it wasn’t), but we’ve got a lot of ground to cover before the next Fed meeting. It’s better to keep your powder dry than to commit too early just to see these gains melt away.
In that vein, Fed Chair Powell threw some cold water on the markets Thursday when he said that he’s not convinced that inﬂation has been tamed and rates could go higher. We should take him at his word.
Total Consumer Credit Rose $9.1 Billion in September… Total consumer credit rose 2.2% on an annualized rate last month after falling $15.8 billion, or at a 3.8% annualized rate, in August.
What it means— Noise. This is just noise. Revolving credit, like credit cards, increased just 2.9% but had gained 13.7% in August. Averaging the two gives us an 8% annualized growth rate, which would seem to be, well, average. The all-important holiday shopping season will give us a much better idea of what to expect in 2024.
The Japanese Yen Traded Above 150 per U.S. Dollar… Retracing its jump on October 31, the yen again rose above 150 per dollar, making the yen worth a little bit less. This drives up inﬂation in Japan while making the nation’s exports cheaper.
What it means— Well, this is interesting. The Bank of Japan (BoJ) has wanted inﬂation for more than 20 years. Now, it has inﬂation and a falling currency but doesn’t know what to do with it. The most likely thing to happen would be for the BoJ to intervene by selling U.S. dollars to buy yen, but this would be a temporary ﬁx. Long term, the BoJ will let interest rates rise to attract capital and stem the fading value of the yen. If the BoJ intervenes, expect the U.S. dollar to ease, which will give equities a small pop.
Italian Woman Wins Court Case To Evict her Two Sons, Ages 40 and 42, From her Home… While roughly 70% of Italian young adults ages 18 to 34 live with their parents, the judge felt crashing with your parents in your 40s was a bit much. Both men are employed but contribute nothing to household expenses and do not help out with chores. In 2007, a politician mocked adults still living with their parents as bamboccioni, or big babies. The two bamboccioni have until December 18 to get out. Hopefully, their departure will be a welcome Christmas present.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
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