Only Perfect Hedge Is In a Japanese Garden

This is an interesting piece from Robert Sinche at Amherst Pierpont on the changing relationship between US 10 year and Eurpean govies on a hedged basis. The US is looking less attractive.   Via Robert Sinche at Amherst Pierpont Securities: One of the persistent sources of support for US Treasury debt, particularly at the longer end of the yield curve, was its relative “high yield “ status. Throughout 2015 and 1H2016 the yield of the 10-year Treasury exceeded the hedged yield (using a conventional 3-month hedge) of 10-year bonds in other developed countries. The dynamics of the hedged-yield analysis is driven by yield curve shapes, with a flattening yield curve in the US making the effective hedged yields in foreign markets more attractive.  As a result of the steepening yield curves across the EZ and UK, the hedged yields on benchmark 10-year bonds in France (2.82%), Germany (2.55%) Continue reading "Only Perfect Hedge Is In a Japanese Garden"

Delinquent CMBS Creeping Higher

Via Bloomberg: CMBS Monthly Late-Pays Spike Most in Six Years, Still Low: Fitch
2017-07-17 15:49:57.920 GMT By Adam Tempkin
(Bloomberg) — U.S. CMBS loan delinquencies increased 22bps
to 3.72% in June from 3.50% a month earlier, the largest month-
over-month spike in six years, Fitch said in a statement.
* This represented largest monthly increase in delinquencies
since the 9.01% peak in July 2011
* Silver lining is that halfway through 2017, loan delinquencies
so far remain considerably below Fitch’s estimate of between
5.25% and 5.75%
* Primary reasons are strong repayment activity of maturing
loans during the first six months of the year, many of which
were previously identified as highly leveraged and would face
difficulty refinancing
* Remainder of the year looks promising with only $20b left to
refinance in 2017 and new issuance still healthy
* Fitch lowering its year-end Continue reading "Delinquent CMBS Creeping Higher"

Some Fed Policy Analysis

Excellent piece via Chris Low at FTN Financial:

AM Economic Comments

by Chief Economist Chris Low

Monday, June 12, 2017

Stocks are lower in Asia and Europe overnight and NASDAQ futures are down enough this morning to suggests Friday’s tech selloff will continue today. US 10-yr note yields were higher overnight but have fallen back to 2.209%, likely in part thanks to the weakness in equities.

The front page Fed-vs-the-financial markets article in today’s WSJ dives into what ought to be the most controversial reason the Fed is raising rates this year: They have decided stocks are overvalued and they can’t stand when long-term interest rates fall when they raise short rates. The paper notes the Goldman Sachs Financial Conditions Index, which has fallen considerably since December, suggesting markets have eased more than the Fed has tightened. The GSFCI is just exactly the sort of thing the Fed loves Continue reading "Some Fed Policy Analysis"

Comments on Possible Fed Appointees

Via Stephen Stanley at Amherst Pierpont Securities:

GOP Collapse in Reddest of States

This story is via the left wing website DailyKos (dailykos.com). I do not agree with the site’s politics  but if you want a deep dive into elections it is worth a visit.   Via the DailyKos:
Daily Kos Elections Morning Digest

Leading Off

Special Elections: On Tuesday night, voters in two counties on the eastern outskirts of Oklahoma City cast ballots in a special election to fill a vacancy for Oklahoma’s 28th State House District, a seat Republicans should have held without so much as an eyeblink: Donald Trump carried it by a monster 73-23 margin in November, even better than Mitt Romney’s 69-31 win four years earlier.

So what happened? Republican Zack Taylor, the owner of an oil and gas company, eked out just a 50-48 victory over attorney Steve Barnes, his Democratic opponent, a difference of only 56 votes. That is, simply put, a stunning Continue reading "GOP Collapse in Reddest of States"

Firing Comey and Trump Agenda

This is an interesting collage of analyst opinions on the firing of FBI Director Comey and the impact that action will have on the Trump legislative agenda. I think the Watergate comparisons are hyperventilating hyperbole. Watergate had been a dominating  from March of 1973 and the so called Saturday Night Massacre was in October. There was a Select Committee chaired by Senator Sam Ervin which produced the John Dean ” cancer on Presidency” narrative and there was Alexander Butterfield and his bomb shell disclosure of Nixon’s taping system. There was significant evidence that Tricky Dick was a crook. In my opinion we have nothing remotely analogous to that body of evidence this time.   Here is the Bloomberg article: Comey’s Firing May Suck Oxygen From Trump’s Agenda: Street Wrap
2017-05-10 13:46:39.346 GMT By Felice Maranz and Brian Chappatta
(Bloomberg) — Donald Trump’s abrupt firing of FBI Director
James Comey Continue reading "Firing Comey and Trump Agenda"

Resistance Broken

This is an excerpt from a piece written by Steve Feiss of Government Perspectives. The excerpt summarized dealer views on the break of resistance on the 10 year note at 2.28/2.30 and what that signals for the near term course of interest rates. If you have Twitter you can follow Steve Feiss  @stevefeiss. Via Steve Feiss at Government Perspectives:

Ø  CitiFX Weekly RoundUp: Sacre Bleur. To parity and beyond? … and on US RATES (“flip a coin”), “The 2.30% area we have been highlighting on US 10s is now coming under pressure. Our medium to long term bias of higher US yields remains unchanged; however, the question is whether the base is in from which we will move higher or whether a broader decline (position flush out) will first be seen before higher levels later in the year. Unfortunately, for the time being, the answer Continue reading "Resistance Broken"