By Cory
If The Yield Curve Could Talk
This post is from Peter Boockvar’s fantastic site BoockReport.com. It was posted yesterday but is very relevant today. There is some further data
Be sure to visit Peter’s site by clicking here. It is a pay but well worth your time and money if you want daily (more days with multiple posts) economic data and market comments.
… Here’s the post with some updated numbers…
If only the yield curve could talk and tell us what it’s really thinking. The 2s/10s spread was 100 bps on election day November 8th. It peaked out 6 months later at 135 bps. On September 27th, the day the Trump Administration unveiled its tax plan it closed at 84 bps, up 4 that day. On Monday it was 85 bps and today it sits at just below 82. Below 75 bps would be a 9 year low.
I mentioned the yield curve this morning, specifically the spread between 2s/10s. Looking at the 5s/30s after the good 30 yr auction just announced has it at just 92 bps. Another 1 bp and it will be at the lowest level since late November 2007. On the day of the Trump tax announcement it stood at 96 bps. The day after the election it got as wide as 137 bps. I’ll say again, If only the yield curve could talk.
5s/30s spread
Following the extreme bullishness and dearth of bears in yesterday’s II data, today’s AAII index of individual investors which is much more volatile week to week saw bulls rise to 39.8 from 35.6. The recent high was last month at 41.3 which was the most since January. Bears fell 5.9 pts to 26.9. Last month it got as low as 22 which was the lowest since last November after the election. Last week, the CNN Fear/Greed index touched 97 intraday (can’t go above 100) and closed yesterday at 83. For those not familiar with how the CNN index is calculated, it is measuring what market participants are actually doing rather than how they are feeling which all the others measure. Here are the 7 indicators, 1)S&P 500 vs its 125 day moving average, 2)# of stocks hitting 52 week highs and lows on NYSE, 3)volume of shares trading in stocks on the rise vs those declining, 4)put/call ratio, 5)credit spread between investment grade and junk bonds, 6)the VIX, 7)difference in returns for stocks vs treasuries.
It’s not exactly where the BoJ wants the inflation to show up but it’s a start. Japanese PPI for September rose .2% m/o/m and 3% y/o/y as expected but that y/o/y gain is the quickest in 9 years if we take out the VAT induced jump in 2014. The caveat though is it is off a really easy comparison as PPI was negative every single month last year. Also, much of the gain was driven by commodity prices. The question now is whether this rise in PPI gets passed on or not to consumers. There was no market response in JGB’s as the 10 yr yield …read more
Source:: The Korelin Economics Report
The post Peter Boockvar Insights – Fri 13 Oct, 2017 appeared first on Junior Mining Analyst.