--but who cares if manufacturing is tanking when the unemployment rate's just 5% --right? Seriously, there really are some good things happening but we've still got a long road ahead of us.
--but who cares if manufacturing is tanking when the unemployment rate's just 5% --right? Seriously, there really are some good things happening but we've still got a long road ahead of us.
Looking at the chart you posted and the closest correlation I can draw is it nearly parallels oil prices. It’s certainly observable here in the middle of Oil Country how manufacturing of all kinds is tied to the activity level in every phase of the oil industry.
Top 'o the morning to all! Stocks jumped and are edging in on all time highs while metals hang on securely. Looking forward futures now put stocks up +0.86% and metals +0.60% -something for everyone!Busy day in the report dept.--
7:00 AM MBA Mortgage Index
8:15 AM ADP Employment Change
8:30 AM Productivity-Rev.
8:30 AM Unit Labor Costs-Rev
10:30 AM Crude Inventories
2:00 PM Fed's Beige Book
--and lots of new FR econ threads:
Just saying.
America has one candidate for the presidency, who is now regularly saying, America badly needs to bring jobs back to the States: Donald Trump.
I completely agree with that.
OVERNIGHT EVENTS:
* Euro-zone CPI Estimate YoY, Nov - lower-than-expected at +0.1% vs. +0.1% Oct and +0.2% consensus. Core-CPI YoY lower at +0.9% vs. +1.1% prior and +1.1% forecast.
* UK Construction PMI, Nov - weaker-than-expected at 55.3 vs. 58.8 Oct and 58.5 forecast.
* UK BRC Shop Price Index, Nov - declined to -2.1% YoY vs. -1.8% Oct.
* MBA Mortgage Applications, Nov - dropped -0.2% vs. -3.2% prior.
OVERNIGHT FLOWS: Treasuries were moderately lower overnight with little in terms of new information to drive trading direction. Volumes were mixed with cash trading at 112% of the 10-day moving-average while TY came in at 75% of the norm. 5s were the most active issue with a 35% marketshare while 10s managed 32%. 2s and 3s combined to take 19%, at 9% and 10%, respectively. 7s took 8% while the long-bond ended with an average 6%.
IMPENDING EVENTS:
* ADP Employment Change, Nov - expected 190k vs. 182k Oct.
* Nonfarm Productivity, Q3 Final - forecast +2.2% vs. +1.6% prior.
* Unlit Labor Costs, Q3 Final - anticipated +1.0% vs. +1.4% prior.
* Fed's Beige Book
* Yellen speaks on the economy to the Economic Club of Washington
* Fedspeak includes Lockhart (voter), Tarullo (voter), and Williams (voter)
TECHNICAL ANALYSIS:
* 2s - The price action in the front-end of the curve continues to diverge with longer-dated maturities as we march toward the Fed's looming liftoff rate-hike. 2-year yields are nearing the top of the range and the price action has been accompanied by a stochastics shift in favor of higher yields. For initial support we're looking at the 94.6 bp high opening level before the NFP-day yield peak at 95.0 bp. Break that and we see little before the Bollinger top at 98.1 bp and then the 1.00% handle-change. For resistance we have a series of moving-averages - the 9-day at 88.9 bp, 21-day at 83 bp and then the 40-day at 72.8 bp. The bottom of the recent range is also relevant at 81.9 bp.
* 5s - 5s are largely grinding sideways with a minor bullish edge which we'd push a bit if they managed to close under about 1.64+% and then we'd look to about 1.59%. That's a tough call. The range is 1.64-1.68% which contains all the volume from the last week with a concentration there at 1.66+%. Call it largely consolidation. Deeper support comes at 1.72% to 1.74%.
5s have done well vs. 2s/7s but momentum is more in consolidation mode. We'll peg resistance at 35.7 bp to37 bp and resistance at 43.7 bp.
* TY1 - TY is getting a bit tired in terms of the short momentum measures but is creeping along an upward sloping trendline with, at least not yet, a clear signal of a reversal. We'll peg support at 126-24/26 (the 9- and 21-day MAs) and then a recent low at 126-12. There is what probably is a minor trendline resistance at 127-07 which could turn out to be a bearish rising wedge and then little until a volume bulge and the 200-day MA between 127-21+/23.
We like 7s on the curve and see them outperforming 5s/10s and 2s/10s. They are right at the 200-day MA vs. 30s around 98 bp and so warrant watching for a possible steepening to, say 101.4 to 103 bp.
* 10s - 10s are in a downward-sloping channel where resistance at the 2.22% NFP-day low has pretty much held during the New York trading session. Momentum is getting rich but hasn't reversed and we think can extract a bit more. Next resistance is 2.15-17%. Support is at a high volume spot at 2.26% built up from Nov 12 and what helps us retain some bullish aspiration is volume building under that mark over the course of the last few trading days. The channel top comes in at 2.28% and we have recent highs, prior lows, around 2.32%. We don't see that until we get NFP under our belt.
10s are getting a bit rich on the curve vs. 2s and 3s but so far have not reversed compellingly and so we'll hold to a bit more flattening - 2s/10s to about 125 bp with a channel projection to 122.5 bp. They also are getting rich vs. 2s/30s but we'll hold for a move to 45-50 bp in the near term. 10s/30s looks rather neutral though a move under 75 bp would compel us to target 72.5 bp.
* 30s - The long-bond has performed well over the last couple weeks and we're starting to see the technicals get near over-extended levels - although the fundamentals continue to support a further outperformance of the sector. We see stochastics decidedly in favor of lower yields and still shy of overbought - but nearing the 20% mark. For initial resistance we have the 2.968% low yield print ahead of Thanksgiving and then the 40-day moving-average at 2.949%. We also have an upward-sloping trendline at 2.91% before the Bollinger bottom at 2.895%. For support we're watching the 9-day moving-average at 3.025% and then a volume bulge at 3.055%. Through there is the post-NFP yield peak at 3.138%, which is also the Bollinger top and the highest yields seen for the 30-year sector since mid-July.
ATTACHED:
* Refis as % of Mortgage Loans - index vs. YoY change
* Mortgage Rates - Freddie Mac 30-year Fixed-Rate
* ADP vs. NFP vs. ISM vs. ISM non-Manufacturing
* ADP by firm size with 6-mo average
* Nonfarm Productivity and Unit Labor Costs
* 2-year Yields Daily
* 3-year Yields Daily
* 30-year Yields Daily
* 7-year Yields Daily
* 3s/5s Curve Daily
READING: 1) WSJ: Morgan Stanley's decision to slash fixed-income jobs followed meetings with shareholders who pushed for cost-cutting, 2) WSJ: U.S. auto sales continued at a torrid pace in November, putting the industry on track to challenge the annual sales peak reached in 2000, 3) WSJ: The BOE declared an end to years of financial-crisis banking overhauls, saying U.K. banks are healthy, 4) WSJ: The ECB may have to rethink some of its self-imposed limits if the central bank wants to ramp up stimulus, 5) WSJ: Treasury Yields Fall as Investors See Slow Pace of Fed Rate Increases -- The Dow industrials rose 1% and U.S. government-bond yields tumbled, after a soft manufacturing report renewed questions about the likely pace of Federal Reserve interest-rate increases over the next year, 6) WSJ: What Happens to the Yuan Now? -- China's commitment to a freer yuan faces immediate tests, as slowing growth puts pressure on its central bank to weaken the currency, 7) WSJ: Why the Treasury Market Has Banks Spread Thin -- The spread between long- and short-term rates will likely renew pressure on bank-lending margins, 8) FT: Brazil's record fall in GDP puts it on track for worst recession since 1930s, 9) FT: ECB to confront 'seeping pessimism' -- Central bankers set to press case for more monetary easing amid sluggish recovery, 10) FT: central banks extend clout in the age of 'great divergence', and 11) BBG: Hedge funds brace for redemptions as losses engulf marquee firms.
That is because car companies are selling cars with 5yr loans to people who can't afford them for sub prime interest rates.
The same thing like the subprime housing debacle back in 2008 EXCEPT there is a lot more money involved. Trillions of dollars and when most of these loans go bad it will get ugly.
What do those quasi-governmental entities have to do with the Main Street economy?