Here we go again on the euro: The bad news is that Italy’s financial crisis is political
The good news is that the European Central Bank, thanks to the global financial crisis and the Greek debt crisis, has mechanisms in place to support Italian bonds, Italian banks, and the Italian financial system. The bad news is that an Italian government has to ask for that help after swearing to be fiscally responsible. At the moment there is, once again, no Italian government. A bid by the populist parties that came in ahead of the field in the latest election was rejected by Italy’s president. And these parties aren’t likely to meet the European Central Bank’s requirements for help.
10-year Treasury yields hit 3.1%; is the bond rout accelerating?
Not so long ago global cash seeking safety and liquidity was keeping the yield on the 10-year Treasury at 2.95% in spite of the huge budget deficit resulting from the December Tax Cuts & Jobs Act and the flood of bond sales by the U.S. Treasury and the prospect of more interest rate increases from the Fed. But now in the last two days 10-year Treasury yields have tacked on almost a full tenth of a percentage point and today the yield on the 10-year Treasury closed at 3.10%.
Notes You Need for May 15: TGT, NAFTA, Mexico election, China economy, 10-year Treasury yields at 3.06%, Korea summit, China Treasury holdings
In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don’t justify a full post. I’ve decided to start compiling these notes here each day in a kind of running mini blog that I’m calling Notes You Need. Today’s 10:20 post is a representative item: “10:20 a.m.: Target (TGT) has cut its next-day delivery fee nearly in half in one of the most visible efforts to capitalize on Amazon’s (AMZN) decision to raise the price of its annual Prime membership to $119 from $99. Target has dropped the delivery price for household essentials to $2.99 from $4.99 and waived it altogether for customers paying with a Target card. The Target Restock service lets shoppers get 35,000 everyday items like paper towels and baby food for a flat delivery fee. And as Target noted in announcing the cuts, “Membership fee? Nope.” Target has also teamed with Google Home to let customers restock with a voice command using Google’s Alexa.”
Notes You Need for May 9: Qualcomm quits, Iran fallout, WMT and FlipKart, whole sale inflation, Treasury auction, California roof top solar
In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don’t justify a full post. I’ve decided to start compiling these notes here each day in a kind of running mini blog that I’m calling Notes You Need. A representative item will look like the from today: “10:20 a.m.: Bloomberg has reported that Qualcomm (QCOM) is considering exiting the market for server chips. Qualcomm started production shipments of its ARM-based 48-core Centriq 2400 server processors only last November. A Qualcomm retreat would be good news for Intel (INTC) and its 50% margins on its server chips with their $5 billion a quarter revenue rate.”
U.S. Treasury sets borrowing record in first quarter–Treasury Secretary Steve Mnuchin–What me worry?
In the period from January through March, the U.S. Treasury borrowed $488 billion. That’s a record for the quarter and $47 billion more than the Treasury had earlier estimated. The Treasury finished March with a cash balance of $290 billion, up from an initial estimate of $210 billion.
Inflation continues its march toward Fed’s 2% target
The Federal Reserve’s preferred measure of inflation, the core Personal Consumption Expenditures index (Which excludes fed and energy prices) rose to an annual rate of 1.9% in March the Commerce Department announced this morning. That was inline with economist forecasts and market expectations. The yield on the 10-year Treasury fell to 2.94%. It stood at 2.96% on Friday.
Trick or trend: Even if the Federal Reserve doesn’t do anything on Wednesday, it could well say something that moves the financial markets
Nobody expects the Federal Reserve to raise interest rates at its May 2 meeting. Or to be precise almost nobody expects the Fed to move. The odds of an interest rate increase by the Fed are just 6.2%, according to the CME Fed Watch Tool, which calculates the odds of a Fed move by looking at prices in the Fed Funds Futures market. In addition there’s no press conference scheduled nor will the Fed produce one of its updates of its projections on the likely performance of the economy. But this doesn’t mean the Wednesday meeting can’t swing the market.
Treasury yields at a critical level but no one knows which way they’ll break
Prices for 10-year Treasuries remained just strong enough to keep yield on this benchmark bond below 3%. Not much below 3%, granted. The high for the day so far is 2.996% as of 3 p.m. New York time. At 3 pm. the yield on the 10-year Treasury was 2.97%, up one basis point for the day.
Trick or trend: 10-year Treasuries drop, yield climbs to February peak at 2.95%
The yield on the 10-year U.S. Treasury climbed to 2.95% today, up 4 basis points on the day. That equals the high yield for 2018 set back in February. The driver this time is an increase in commodity prices that has revived fears of inflation
Are foreign buyers pulling back from Treasuries? Recent auctions say so
It’s a recent development, but it looks like more foreign buyers are sitting out recent Treasury auctions. At Tuesday’s $30 billion auction of three-year notes, foreign buyers accounted for the smallest share of the offering since September.
Back to normal today? And a reminder of what normal is
With all available officials on deck today in Beijing and Washington to talk down fears of a trade war and to talk up prospects for trade talks, the U.S. financial markets have returned to “normal.” And what is “normal” right now? A 0.47% gain in the Standard & Poor’s 500 stock index as tech shares recover with Facebook (FB) up 1.81% and Amazon (AMZN) up 2.62%. Normal is also a down day for Treasuries
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