Monthly Archives: May 2014
To no surprise, the BEA lowered their Q1 GDP growth estimate from +0.1% to – 1.0%. The lowering was no surprise, but the amount of drop was a little surprising. The BEA maintains that their 3rd estimate is the one to put weight behind. To this end, don’t be surprised to see the 3rd estimate miraculously revised higher (at the end of June) — […] Read the rest of this entry
Someone forgot to tell the U.S. Tbond investor the U.S. economy is fantastic. They also forgot to tell the Tbond investor to be afraid because the Fed –the largest buyer of Tnotes & Tbonds via QE3– is backing away, and that the price of US Tnotes and Tbonds is supposed to drop. Yes, yes, interest rates are going up — the perennial refrain from […] Read the rest of this entry
Today’s $16B auction of 30-yr U.S. Tbonds was filled, but the bid-to-cover was quite low. I guess today’s risk-on Draghi junk rally inspired some safe-haven buyers to stay home. The long bond ETF I use (TLT) dropped 0.5% in 3-4 minutes after today’s Tbond auction results were announced. Nerves still in check. TLT remains a solid safe haven for a long time yet. […] Read the rest of this entry
Draghi’s comments this morning have been good for a 14 point bounce on the S&P500 in the past 2.5 hours. It will be interesting to see how long this lasts. FYI: the US Tbond buyer is un-fazed my Draghi’s comments. The long bond is doing fine during this Draghi junk rally (TLT price is up on the day).
ECB President Draghi’s press conference is live (now). There are no new actions announced at today’s meeting, however, Draghi suggests the ECB will take an action in June. He did not say what action, though. The euro immediately climbed down from $1.40 USD /euro to under $1.39. Draghi has several options: Stop sterilizing current ECB bond purchases. Sterilization refers to the action of selling […] Read the rest of this entry
For more than a year I’ve been expecting the ECB to tag-in with a QE printing press when the Fed tags-out. I’m still of that view. However, the ECB may wait until November-December to announce a QE program instead of my previously expected July-August timeframe. It depends on how ugly the spread in interest rates becomes between core and peripheral European sovereign bonds. Right […] Read the rest of this entry