Insights
U.S. Interest Rates Commentary and Research from Eric Hickman
This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell futures/securities. The material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.
The Fed near the top of a wave
The Fed was hawkish today causing the 2-year to rise 13 basis points, but this tone and economic projections are entirely based on the “mini-boom” that’s occurred since August which is not durable. Powell made this distinction in an answer to a question about the…
LDEI Index Description
As many of you know, I have been working on an index this year, the Lantern Daily Economic Index, to show how economic data is evolving daily. I’ve long felt that economic data drives interest rates more than is appreciated and now I can prove…
Service-sector, Powell, and the Beige Book
Three important things today: service-sector ISM, an interview with Jerome Powell, and the Beige Book 1. The service sector PMI (purchasing manager’s index) from the Institute of Supply Management was released this morning, falling almost 4 points from its last reading to 52.1 from 56.0….
The LDEI is more reliable than the Citi Surprise Index
Currently, those wanting to see real-time trends in economic data turn to the Citi Economic Surprise Index. Many strategists use it because it is the only tool, until the Lantern Daily Economic Index (LDEI), to track real-time aggregate economic data. In the latest FOMC meeting…
Economic data are rounding over and so are yields
Happy Thanksgiving everyone! On balance, since November 12th when the NFIB small-business survey was released strong, economic data has been coming back down again. This has been seen in retail sales (less autos), housing starts, permits, new home sales, durable goods orders (less transportation), and…
What does the LDEI index level mean?
Unlike the Chicago Fed National Activity Index, the Lantern Daily Economic Index (LDEI) includes real and inflation data. This better reflects the “totality of the data”. The chart below shows how the LDEI compares to nominal GDP (QoQ%) over its history. They are very similar,…
76% hit rate over the last year
Jeffrey Gundlach, founder of Doubleline, and considered by many to be the “Bond King” has talked about his “hit rate” in various places of being a little over 70%. He talks about this in an interview here. 76% of my calls have been correct in…
Powell not that hawkish and more
Jerome Powell spoke and had a Q&A session with Catherine Rampell of the Washington Post in Dallas yesterday. Here is what I noticed. In the opening remarks, Powell emphasized the idea that the economy is good, each meeting is not pre-determined, and that the committee…
Four charts
After the election, and with interest rates rising, it feels as though a recession is the furthest thing from happening. Yet, I continue to expect one early next year. Economic data has come in waves all throughout this “top of the business cycle”. Every time…
FOMC meeting review: economic rate rise and slightly dovish
The FOMC met today, cut 25 basis points, and changed very little of the statement. Powell’s press conference was slightly dovish. Here is what stood out to me: 1. About higher Treasury yields. When asked about rising Treasury yields (a couple times), Powell said it…