Good Thursday AM,
Yikes, sorry it’s a bit longer.
Bonds are seeing a bounce this morning and it purely technical. The ten-year has also dropped back down to 1.48 which puts it back in the range we should be. The price of the ten-year has also reentered the upward channel and this is a very important fact. Often times when we break below a channel, not only do we run back to the top, we run above the channel. FIRST, we need to knock on wood and hope we can hold after tomorrow’s CPI release. A high CPI number will likely crater the markets. Some pain is built into the current prices, but if the number exceeds the markets puke point, LOOK OUT! I would be very careful floating through tomorrow’s CPI release. Nobody knows what that will look like and anybody that wants to take on the risk is just guessing.
This is a double-edged piece. First and foremost, tragic for people, families, friends but also is referendum on how business wins (especially insurance, don’t get me started on the recession and preferential treatment AIG received). This is mostly due to the pandemic, life-insurance payouts last year rose 15% to $90.43 billion, the sharpest rise since the 1918 influenza epidemic drove them up 41%, according to the American Council of Life Insurers. Meanwhile, sales of insurance policies took their biggest jump in 25 years, according to industry-funded research firm Limra. Combined with good returns on some investments, that lifted industry assets by 7.7% to $8.2 trillion, the ACLI’s figures show.
Tomorrow is CPI day, and to be honest, because of the salience of inflation right now, it’s really the new Jobs Day. I say that with also a little sarasm as the market is expecting an annual increase as the newer data included in the report replaces older and lesser readings. The monthly reasidin will be the piece to watch out for. Markets expecting .7% gross and .5% core (without food, energy, etc..). There are a whole bunch of detailed pieces to share but am trying to keep this manageable by sharing just this one bullet point below. Keep the supply/demand curve (you know the one from high school) in your mind as I have yet to find it irrelevant, anywhere. Wages will be going up and will drag with it buying power and prices.. If you can afford it, most clearly will buy it.
There are 11 million job openings and only 6.9 million unemployed in the U.S., the highest ratio of openings to active job seekers on record, according to Labor Department data out Wednesday. “This report once again shows strong demand from employers leading to a hot labor market. The bargaining table is tilted more toward workers than it has been in the past,” said Nick Bunker, economist at Indeed.
Please remain safe and healthy, make today great.