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June 2010

Unemployment Rate Unlikely to Budge until 3mn New Jobs Created

Disheartened job seekers who fled the labor market in mass during the height of the recession have begun to return putting pressure on the US unemployment rate.   Based on a simple interpolation the U.S. labor force today should total 157.2mn, however due to the exodus of job seekers the labor force presently amounts to only […]

ECRI Weekly Leading Index Pointing Toward a Double-Dip

Those looking for evidence of an upcoming double dip recession may have found their canary.  The Economic Cycle Research Institute’s (ECRI) Weekly Leading Index is pointing to serious trouble ahead for U.S. economy with the index falling seven consecutive weeks moving into negative territory.  According to Laksham Achutan, managing direction of ECRI, “The continuing decline […]

Consumer Confidence To Remain Range Bound, Despite Friday’s Marginal Improvement

Despite Friday’s better than anticipated confidence number it’s unlikely the index can show sustained gains until initial jobless claims move well below current levels.   As the attached chart highlights, in 2009, as claims began to fall, confidence began to rise off of crisis lows.  However, since the start of 2010 this trend came to an […]

‘What’flation, 2Y Treasuries Yielding 67bps

Inflation doves can look no further than near record low yields on 2-year Treasuries to squelch inflation hawks ‘premature’ concerns.  The 2-year yield is reflecting the fact that the recovery will remain lukewarm, with downside risks outweighing the contrary, essentially opening up hunting season on Fed hawks—already in small supply. While hawk hunting may be […]

Why Homebuilder Stocks Haven’t Plunged

The amount of new homes for sale in the U.S. reached a multi-decade low in May helping boost U.S. homebuilders.  To find a point in time where fewer new homes were on the market you would have to go all the way back to the early 70’s/late 60’s (see chart).  While the sales pace of […]

China’s Real Estate Free Fall May Not Bode Well For Commodities

China’s plummeting real estate transactions could spell trouble for domestic steel and cement industries.  The average number of real estate transaction in China’s 15 largest cities fell 75% on an annual basis according to the most weekly June release according to Goldman Sachs.  On a ytd basis transactions have declined -29%.  The Chinese government has […]

Germany vs. France Not Just Being Played on the Pitch

The spread between France’s and Germany’s 10y Government bonds remain near levels not seen since the collapse of Lehman as France takes on tough fiscal tightening.  Since the onset of the European debt crisis France and German yields have benefitted from worried investors moving funds away from economically weak Eurozone peripheries to the regions ‘stable’ AAA rated […]

Spain Begins to Echo Greece

The spreads for Europe’s economically weak peripheries over equivalent German bonds—the European benchmark—continue to approach their pre-bailout highs.  The 10Y spread in Spain again reached record levels amidst rumors that IMF, EU and the U.S. Treasury may be creating a EUR250bn credit line for the country (so far the EU and the Treasury department have […]

The Decline in the BDI Doesn’t Mean Much…

The Baltic Dry Index (BDI) has fallen 28% from its recent high on May 26th, indicating to some weakness in the global economy.  The BDI tracks the prices of bulk carriers which are the life-blood of global trade carrying everything from iron ore to grain.  While the 28% decline may seem ominous, the BDI is […]

Risk Makes a Comeback

Investors are feeling more at ease with the uncertainty facing global market.  The AUD/JPY exchange rate—a popular FX carry trade and risk metric—has moved off of its recent lows of less than 74 to a level of 79.4.  At the same time, 3M LIBOR halted its climb, and has remained fairly steady around 0.54%, albeit […]