Economy

Bond Yields Spiraling Downward

Apr 5, 2023 2 min read

What does the bond market know that the equity market doesn't? The yield on the 10-year Treasury is down from 4.25% on October 24, 2022 to 3.29% today. The S&P 500 is up 8.0% over the same period. Bond investors must believe that the banking crisis will soon morph into a credit crunch and a recession, so inflation will continue to fall perhaps

Ed Yardeni

Labor Market Tight. Goods Market Not So.

Feb 28, 2023 1 min read paid

The Fed would like to see fewer job openings to help moderate wage inflation. The time series is reported in the JOLTS report. January's update comes out March 8. It could jolt the Fed into remaining hawkish. That's because it is highly correlated with the The Conference Board's "jobs plentiful" series that came out today and that's been up two

Ed Yardeni

Loose Fed Lips Sink Stocks & Bonds

Feb 16, 2023 2 min read paid

Stock and bond prices fell today as two none-voting FOMC participants (Bullard & Mester) suggested that higher-for-longer interest rates will be necessary to bring down inflation. They were reacting to the latest batch of economic indicators confirming that the labor market is tight, consumers are still spending, and inflation may not be falling fast enough. January's PPI, released this morning, rose 0.7% m/m. That was above

Ed Yardeni

Is The Service-Providing Economy Cooling Off?

Jan 9, 2023 2 min read paid

Consumers have cut back on spending on goods because they went on a goods-buying binge on them during 2020 and 2021, when many services businesses were either closed or limited by social distancing restrictions. During 2022, they pivoted to spending less at retailers and more at services providers as they reopened (chart). Consumers tend to determine the pace of economic activity. In a soft-landing scenario, they should continue to spend

Ed Yardeni

Regional Surveys Suggest Weak M-PMI

Oct 31, 2022 1 min read

Bonds and stocks might rally tomorrow if the M-PMI is as weak as suggested by the regional business surveys conducted by five of the 12 regional Federal Reserve Banks. The average of the five composite indexes dropped deeper into negative territory during October (chart). The average of the new orders indexes remained near recent negative readings, while the average for the employment indexes remained solidly positive. All three are highly

Ed Yardeni

The Economic Week Ahead: Sept. 19-23

Sep 18, 2022 1 min read

It's a light week for economic releases in the US. The focus will be on the Fed. Wednesday will be action packed with the FOMC's latest policy statement and Summary of Economic Projections both out at 2:00 pm and Fed Chair Jerome Powell's presser at 2:30 pm. Powell is likely to be as hawkish as he was during his August 26 speech

Ed Yardeni

Consumers Have Nothing To Fear But The Future

Jul 26, 2022 1 min read

Consumers are looking into their crystal balls and they don't like what they see. Even though the present still looks bright, the future is looking darker. July's Consumer Confidence Index (CCI) continued to decline in July as it has been since mid-2021 (down to 95.7), led by its falling expectations component (down to 65.3) (chart below). The current conditions component edged down in July,

Ed Yardeni

More Signs of A Mid-Cycle Slowdown

Jul 21, 2022 1 min read paid

The latest batch of economic indicators are in line with our mild recession outlook (a.k.a., a mid-cycle slowdown). We now have June's Leading and Coincident Economic Indexes (LEI & CEI) and July's NY and Philly regional business surveys, which are conducted by five of the 12 Federal Reserve district banks. The averages of the five tend to closely track the national manufacturing purchasing managers

Ed Yardeni

NY Fed Survey Shows Easing Pricing Pressures

Jul 19, 2022 1 min read

The NY Fed's July business survey showed significant declines in the prices-paid and prices-received diffusion indexes . Six-month-ahead expectations are down even more for both indexes (charts below). We will be closely examining the July business surveys conducted by four other Federal Reserve bank districts for confirmation that inflationary pressures are abating nationally. Philly will be released on Thursday. Dallas, Richmond, and KC will be out next week. We

Ed Yardeni

The Economic Week Ahead 7/18/22

Jul 17, 2022 1 min read

The week ahead is a light one for economic indicators. Monday starts out with May's Treasury International Capital System data on net capital inflows into the US. April's data showed a near-record $1.5 trillion in private net capital inflows, which certainly explains why the dollar has been so strong. This is consistent with our TINAC theme, that "there is no alternative country" to

Ed Yardeni

A Growth Recession?

Jul 15, 2022 2 min read paid

Following today's retail sales and industrial production reports, the Atlanta Fed's GDPNow tracking model revised real GDP growth down to -1.5% (saar) during Q2 from -1.2%. Real consumption spending was lowered from 1.9% to 1.5%, while gross private investment now shows a decline of -13.8% instead of -13.7%. Consider the following: (1) Retail sales. Adjusted for inflation, retail sales has

Ed Yardeni

Jamie's Hurricane

Jul 14, 2022 1 min read

The stock market is down this morning on worse-than-expected PPI inflation news, heightening fears of more aggressive Fed tightening and a recession. The yield curve spread between the 2-year and 10-year Treasuries is solidly inverted at -24bps. In addition, JP Morgan Chase reported that Q2 profits slumped as the bank built reserves for bad loans by $428 million and "temporarily" suspended share buybacks. The bank's CEO

Ed Yardeni

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