Good Friday AM,
No data today and with the heatwave across the country, on a Friday in July, trading desks are abandoned.
Equities are on a tear that I don’t recall. Ten days in the green is almost unheard of and we are close to a record of 12. Bonds on the other hand have been bouncing on both sides of the ledger all week and look to be ending, just about where we started. I guess it is not to be unexpected with limited data and a Fed meeting next week but it would have been better for my blood pressure if we could have done away with the volatility. That said, we don’t have much data between now and next Wednesday’s Fed announcement so unless we get a black swan event (kind of feel like we are getting close to one), we are likely to be in this range until Wednesday at 11am. I don’t know there is any urgency to lock nor any reason to float now. As I often suggest, without a compelling reason to float, the defensive and correct decision is to lock.
Dr. Elliott Eisenberg dropped some knowledge last night that I thought was interesting.
Is the Fed having us look at the wrong metrics? “Looking back at changes in U.S. unemployment rate data since 1953, a period including 10 recessions, on average the unemployment rate has not noticeably changed during the 12 months leading up to a recession. Once the recession begins, however, the unemployment rate slowly rises and peaks 12 months later at a level three percentage points higher than when the recession began. The unemployment rate is not a leading economic indicator.”
From the WSJ and what we anecdotally already know:
Frustrated home shoppers face high mortgage rates and a shortage of available properties, a combination that made purchases less affordable and dented sales in June. Elevated mortgage rates resulting from the Federal Reserve’s actions since early last year are keeping many buyers out of the market and reducing demand. At the same time, the rates are discouraging homeowners from selling, limiting the supply of homes for sale. The result is declining home sales, but stubbornly high prices. In many parts of the country, buyers who can afford to stay in the market are still facing bidding wars.
Existing home sales, which make up most of the housing market, decreased 3.3% in June from the prior month to a seasonally adjusted annual rate of 4.16 million, the National Association of Realtors said Thursday. That was the slowest sales pace since January.
And, this was a follow up to my questions last week on the accuracy of the apparent rise in consumer sentiment.
I am glad the WSJ had something to say about it but why wouldn’t the data be scrutinized when released? Markets react and then move on… we don’t get a redo on the price action for previous days.
A pair of optimistic headlines in recent weeks suggest consumers are beginning to shrug off higher interest rates, the inflationary surge and recession fears—and feeling confident again about the economy. The Conference Board reported its measure of consumer confidence in June climbed to its highest level since January 2022. The latest reading from the University of Michigan’s index of consumer sentiment was the highest since September 2021. But WSJ’s Josh Zumbrun writes that a closer look at the numbers paints a more complicated picture than the simple story that things are the best in a year and a half.
And last, I love this idea (other than it will cause ripples in the banking sector as the commercial property valuations will take a hit!!!). San Francisco Mayor London Breed has a solution for the glut of empty offices in her city: turn them into classrooms. The San Francisco Business Times reported the mayor has called on the University of California, the San Francisco Unified School District and City College of San Francisco to consider moving into the vacant offices.
Please remain safe and stay healthy, enjoy the weekend, and first, make today great!
