Vital information about the markets, the economy, rates, and more.


Financial Focus

April 22, 2019  

GOOD MORNING!    The US data released last Thursday was generally strong.  Other than the ‘flash PMIs from the International Markit Group coming in below estimates, but still in expansion territory, the data strongly hinted that the US may be climbing out of the 1st quarter soft patch.  With hindsight being 20-20, it appears that the late year sell-off in risk assets, the government shut-down, trade tensions, weird winter weather, the global economy hitting a chug hole, and an inventory overhang combined to scare consumers all combined to cause the US economic engine to sputter.  Yesterday’s release of retail sales strongly suggested the consumers’ absence may have been transitory and they are back, and spending.  In addition to March’s retail sales’ rebounding, initial jobless claims declined to a new near 50-year low.  The Conference Board’s Leading Economic Index increased in March by 0.4%, the most in 6 months.  The data was largely overlooked by the media circus that followed (and likely to continue) the release of the Mueller report.  It appears it will lead to further partisan divide, more gridlock, more dysfunction by our elected officials and additional distractions from doing what they were elected for. 

   Many markets remain closed for Easter, but the financial headline story should be the sharp rise in oil prices.  In addition to the turmoil in Libya that has the potential to disrupt supply, there are reports that the US is going to tighten sanctions on Iran’s exports by not renewing waivers in early May to let some nations buy Iranian oil.  The nations that have the current waivers include China, India, Japan, South Kore, Italy, Greece, Turkey and Taiwan.  If true, it will also ratchet up tensions in the Middle East.  With oil on the rise and a heavy schedule of Treasury supply this week, Treasury yields are narrowly mixed with the long-end slightly higher, diverging from its normal correlation trade to stocks as US stock index futures are trading modestly in the red.  In addition to March’s existing home sales today are Treasury auctions of 3- and 6-month T-bills sized $42 and $36 billion, respectively.  Tomorrow’s auction will include $26 billion 52-week T-bills and $40 billion 2-year T-notes.  Auctions on Wednesday will have $20 billion 2-year Floating Rate Notes (FRNs) and $41 billion 5-year T-notes.  Thursday will wrap up with auctions of $32 billion and 4- and 8-week T-bills with the sizes still to be announced.  All told there will be over $300 billion of Treasuries to hit the market this week.  Fed speakers are on an extended Easter holiday.

                                

GENERAL
TODAY
PREVIOUS
FED FUNDS
2.25% to 2.50% 2.25% to 2.50%
1 MONTH LIBOR
2.48088%
2.48738%
S & P 500
2905.03 2905.03
GOLD
1281.00
1276.00
YEN
111.92 111.92
EURO
1.1249 1.1246
WEST TEXAS CRUDE
64.00 64.00
T-BILLS
YIELD
YIELD
3 MONTH
2.41 2.41
6 MONTH
2.45 2.45
1 YEAR
2.43 2.43
T-NOTES / BONDS
YIELD
YIELD
2 YEAR
2.37 2.38
3 YEAR
2.34
2.34
5 YEAR
2.37 2.37
10 YEAR
2.56 2.56
30 YEAR
2.97 2.69

Data Source: Bloomberg Financial Markets