Morning Reads
- Hamas Hits Israel’s Economy, Central Bank Says
- France’s Diesel Demand Plunge Signals Economic Woes
- Germany to Pass Japan as Third-Largest Economy, Helped by Weak Yen
- China’s Property Crisis Is Upending Tens of Thousands of Lives
- Xi Makes Unprecedented Central Bank Visit in Sign of Focus on Economy
- How Far Is China’s Slowdown Spreading? Ask a Dairy Farmer 6,000 Miles Away
- Energy Agency Sees Peaks in Global Oil, Coal and Gas Demand By 2030
- Gavin Newsom Wants to Export California’s Climate Laws to the World
- Jamie Dimon Criticizes Central Banks for ‘Dead Wrong’ Forecasts
- Deficit Doubling as US Economy Grows Shows Why Yields Are at 5%
- How the Highest Bond Yields in 16 Years Could Chill the Hot U.S. Economy
- New Normal or No Normal? How Economists Got It Wrong for 3 Years
- Money Managers With $100 Trillion Confront End of the Bull Market
- EU Lawmakers Back Easing Securities Rules to Attract More Listings
- London’s Latest New Listing Debacle Drops 75% on Profit Warning
- GM Removes Guidance After UAW Strike Muddies Profit Outlook
- 3M Says Business Is Improving, Boosts Earnings Guidance
- KKR’s Chip Play Will Win Big in Japan
- Blackstone Chief Schwarzman Says Remote Workers Don’t Grind as Hard
- How Columbia Sportswear Is Loosening Its Ties to Asia
- The Stratospheric Rise of Lionel Messi’s Pink Jersey
- LeBron James, Peyton Manning and Obamas Plan Basketball Series for Netflix
Open Interest Changes
PREMIUM
Prepper
Bonds and Bills
Wild swings continue to envelop the bond market, with two notable names in the industry making fresh calls on the sector. The pairs' statements also continue to come hours apart from each other, as they did on Aug. 3, when they both became growling bond bears and added to the pressure on long-term Treasuries. Since then, the yield on the 10-year Treasury (US10Y) jumped nearly an entire percentage point, climbing from 4.07% to top 5% yesterday, while the 30-year Treasury (US30Y) went from 4.16% to a high of 5.15% in just under two months.
Old tweets
Bill Ackman: "If long-term inflation is 3% instead of 2% and history holds, then we could see the 30-year T yield = 3% + 0.5% (the real rate) + 2% (term premium) or 5.5%, and it can happen soon. There are many times in history where the bond market reprices the long end of the curve in a matter of weeks, and this seems like one of those times."
Bill Gross: "10 yr yields? Overall bearish"
New outlook
Bill Ackman: "We covered our bond short. There is too much risk in the world to remain short bonds at current long-term rates. The economy is slowing faster than recent data suggests."
Bill Gross: "Regional bank carnage and recent rise in auto delinquencies to long-term historical highs indicate U.S. economy slowing significantly. Recession in 4th quarter. On bonds. Invest in the curve. Various combinations 2/10, 2/5. Should go positive before year end. I’m buying SFR h5 (SOFR futures). 'Higher for longer' is yesterday's mantra."
Remember, the last time rates were this high was pre-2008, and it seems like the Bills now feel that the rout in Treasuries seen in the aftermath of the COVID pandemic has gone too far. Markets appeared to have adopted that view on Monday, with the yield on the US10Y sinking 20 bps to a low of 4.80%, but it is too soon to tell if that sentiment will hold. Term premium is the word on Wall Street, as well as regular investors that are looking at related bond ETFs, but there are many factors at play that can have impacts on benchmark yields. Among them are forecasts and actual economic data, debt sustainability, and geopolitical developments, with eyes tightly kept on the Federal Reserve and words from the officials on financial conditions.
SA commentary: "The important question is, what is driving rates and yields at different maturity," writes analyst Adam Vincze in Inversion Analytics Suggest Bottom In Long-Term Treasuries, Points To Fed Cuts In 6 Months. "The U.S. Treasury yield curve has been inverted since 2022, signaling a potential economic downturn, and analytics suggest the ballooning budget deficit is hiding weakness in the economy." (70 comments)
Cuckoo for cocoa
As Halloween approaches, it looks like candies could become more expensive as hotter and drier weather caused by El Niño is tightening the global cocoa supply. Cocoa futures (CC1:COM) in New York jumped as much as 2.5% to $3,786 per metric ton on Monday, marking the highest level in over 44 years. The 2022/23 season has already seen a deficit of about 100K tons of cocoa, while hoarding of cocoa beans has been on the rise due to expectations of higher prices. SA analyst Weather Wealth previously forecast that higher cocoa prices can benefit large chocolate brand owners but strain retailers, restaurants, and ingredient suppliers. (2 comments)
Live traffic
Ahead of a potential ground invasion into Gaza, Alphabet's (GOOG, GOOGL) Google has temporarily disabled local real-time traffic updates on its apps Google Maps and Waze. Apple (AAPL) Maps also disabled such updates in Israel, with the move reportedly implemented at the request of the Israel Defense Forces. "As we have done previously in conflict situations, we have temporarily disabled live traffic conditions and busyness information out of consideration for the safety of local communities," a Google Maps spokesperson said. Google had made a similar move last year, when it disabled real-time vehicle and foot traffic data in Ukraine after Russia invaded the country. (6 comments)
Crypto rally
Bitcoin (BTC-USD) bulls are back, with the top cryptocurrency briefly touching $35K today, as traders continued to wager on the potential approval of what would be the first U.S. exchange-traded fund that invests directly in the token. "Over the past month, growing investor confidence in the imminent approval of BTC Spot ETFs has driven considerable momentum toward BTC," said Matteo Greco, analyst at Fineqia. "This, combined with the scheduled BTC halving in the latter part of April 2024 has prompted investors to favor BTC over other digital assets." The bullish price action buoyed crypto-related stocks including Coinbase (COIN), Riot Platforms (RIOT) and MicroStrategy (MSTR). (26 comments)
Today's Markets
In Asia, Japan +0.2%. Hong Kong -1.1%. China +0.8%. India closed.
In Europe, at midday, London flat. Paris +0.7%. Frankfurt +0.3%.
Futures at 7:00, Dow +0.4%. S&P +0.5%. Nasdaq +0.6%. Crude +0.4% to $85.87. Gold -0.8% to $1,972.90. Bitcoin +12.6% to $34,404.
Ten-year Treasury Yield +3 bps to 4.87%.
Today's Economic Calendar
9:45 PMI Composite Flash
10:00 Richmond Fed Mfg. Index
1:00 PM Results of $51B, 2-Year Note Auction
1:00 PM Money Supply
Companies reporting earnings today »
What else is happening...
WSB survey results: See what stock is the top 'Magnificent 7' holding.
Nvidia (NVDA), AMD making ARM-based chips to rival Intel (INTC).
Chevron (CVX) sees no antitrust issues with Hess (HES) takeover.
Tesla (TSLA): DOJ is still asking questions on Autopilot features.
Lockheed Martin (LMT) drops out of U.S. Air Force tanker bidding.
Li-Cycle (LICY) collapse seen as a potential warning for EV sector.
AGNC Investment (AGNC) sees lower Q3 earnings; stock slides.
IEA sticks to fossil fuel forecast; undercuts calls for more investment.
Redfin: New home listings tick up in September, but cancellations rise.
Occidental Petroleum (OXY) falls as megadeals remove potential buyers.
After choking exports of chi