Panem et circenses
March 31, 2023
–They just HAD to put Trump on the front pages again.
–Rate trading was quiet yesterday in front of today’s PCE prices, expected 5.1 from 5.4 with Core 4.7 vs 4.7 last. With the recent hike, the FF rate will now be above Core. The curve inverted a bit more with twos up almost 2 bps to 4.097% and tens down an equal amount to 3.545%. I marked 2/10 just below -55. On the SOFR curve, the front 4 contracts were down 3.5, reds -1.5, greens +3.875, blues +5.0. From SFRH’25 to H’28, settles are between 9700 and 9685, yields 3-3.15%. The dollar index has been trending lower since the start of last year’s fourth quarter, and is now just above 102, having been 114 in September.
–Almost Daily Grant’s had another interesting clip yesterday:
Silicon Valley picks up the tab. On Tuesday, Apple, Inc. formally announced the long-awaited debut of Apple Pay Later for “select” U.S. customers. The newfangled service, which will front up to $1,000 for online and in-app store purchases split into four payments spread over six weeks without interest or fees, will roll out nationwide in the coming months, the company conveyed.
–ADG referred to this as BNPL (buy now, pay later). Four payments, 6 weeks. Is that what we’re now referring to as “innovation”? They already have something like this. It’s called a credit card. If you buy at the start of the billing cycle, you get 4 weeks without interest or fees.
–With the curve giving back much of the rebound seen after the failure of SVB, the market perceives the Fed as “tight”. I’ll just add a couple of end-of-month, end-of-qtr, items that run along the same theme. A ZH article cites the RH (Restoration Hardware/ high end furnishings) earnings call, with CEO Friedman saying business in his sector will be getting worse before it gets better.
https://www.zerohedge.com/personal-finance/its-not-rocket-science-rh-ceo-warns-not-normal-dangerous
Of course, this guy has been warning of trouble and uncertainty (correctly) in the economy for over a year.
–Another note was on BBG yesterday:
Worker Adjustment and Retraining (WARN) Notices are picking up which points to unemployment claims soon rising and a deterioration in the jobs market, posing a risk to stocks.
“The WARN Act obliges employers with more than 100 full-time workers to provide written notice to the state and the workers themselves at least 60-90 days ahead of planned plant closings and mass layoffs.”
