Morning Report: Big week for economic data

Vital Statistics:

S&P futures4,154-3.0
Oil (WTI)77.44-0.43
10 year government bond yield 3.53%
30 year fixed rate mortgage 6.50%

Stocks are flattish this morning as earnings continue to come in. Bonds and MBS are down.

The week ahead will have a lot of economic data including house prices, new home sales, GDP and Personal Incomes / Outlays. The Personal Incomes / Outlays report on Friday will contain the Personal Consumption Expenditures index, which is the Fed’s preferred measure of inflation. There won’t be any Fed-speak as we are in the quiet period ahead of next week’s FOMC meeting.

The Fed Funds futures are pricing in a 90% chance of a 25 basis point hike next week. The June futures see a 25% chance for another 25 basis point hike, and the futures start pricing in rate cuts by the end of the year.

The market sees first quarter GDP at 2%. The Atlanta Fed’s GDP Now Index sees Q1 GDP at 2.5%. The Chicago Fed National Activity Index showed the economy growing at a below trend pace in March, similar to February.

Hedge Funds are short Treasuries across the board, with CFTC data showing a record short position in the 10 year Treasuries. This would appear to be a bet that the Fed will keep hiking rates well above the market’s forecast of 5%. That said, if rates kind of stall out here, we could see a short covering rally this summer. We will get a read on MBS spreads tonight when mortgage REIT AGNC Investment reports its earnings.

I spent some time on earnings reports in this week’s Weekly Tearsheet on Substack. Check it out and please consider subscribing.

Is commercial real estate the next shoe to drop in the banking sector? Some market watchers think the commercial real estate market is in for some rough sledding, especially the office market. The office market in particular is struggling as remote work is reducing demand for space. The vacancy rate for office reached 12.9%, which was worse than anytime during the Great Recession.

This is in some ways a replay of the 1970s, when people fled the cities to the suburbs and companies relocated operations. In other words, this is a secular change, not a cyclical one. Lower interest rates might not make all that much of a difference.

30 Responses

  1. Seems pretty obvious that this is tied to the Dominion lawsuit settlement. Guess Hannity, Bartiromo and Ingraham won’t be far behind. Wonder who will pick him up? Or does he go on his own a la Joe Rogin and Alex Jones?


    • He could do it on his own if he wanted. Might join Daily Wire. Ben Shapiro is pretty big about snapping some of these folks up. Not likely to pay what Fox does on the front end, but not impossible. Fox is self-immolating. IMO.


    • Don Lemon is out at CNN.

      Wonder if the government told the media companies to lower the temperature.


      • Seems unlikely. Lemon has been being maneuvered towards the door ever since Zaslav took over. I have no idea, but if Tucker got fed up and quit that could also have been long brewing. I expect there are more than a few people in positions of power at Fox for whom firing or pushing out Tucker would be a lifetime achievement award from the people whose approval they care about. I wouldn’t be surprised if more than one sees their missions as either transitioning Fox into MSNBC or putting it out of business completely. And whom in the government would tell them to lower their temperature? The Biden admin? The FCC? Anyone in the executive branch? That doesn’t seem to be consistent with their own behavior.

        No doubt they’d want to shut Tucker and Fox and Friends up, but I don’t think that would be about lowering the temperature as making sure only the right places had the temperature jacked up.


    • He should go on his own. His brand is probably better than Fox’s at this point.


    • The Bee sums it up:

      “Fox News Fires The Only Reason People Watch Fox News
      · Apr 24, 2023 ·


  2. In other news:

    “Pfizer Quietly Financed Groups Lobbying for COVID Vaccine Mandates

    Many of the supposedly independent consumer, medical and civil rights groups that created the appearance of broad support for the mandate received funding from one of the vaccines’ manufacturers.

    Lee Fang
    Apr 24, 2023”


  3. Lol! Apparently sources don’t know shit.

    Wonder how long his No Compete is?


  4. This thread is funny. Once a commenter linked to the Variety article slamming Lemon the comments switch to Tucker.


  5. Lol!


  6. Not going to miss Tucker……………….but wondering why he was cut? I think there must be something we don’t know about the next lawsuit???


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