US Economy

Loose Lips Sink Bonds & Stocks

Oct 20, 2022 2 min read paid

The members of the FOMC ("Federal Open Mouth Committee") continue to sink prices in the fixed-income markets. The 2-year Treasury yield soared to 4.62% today, while the 10-year Treasury yield jumped to 4.24% (chart). The S&P 500 rallied through mid-morning, but then fell the rest of the day to 3665.78, just below the June 16 low. Triggering today's selloff in the

Ed Yardeni

Consumers Are Still Consuming

Oct 11, 2022 1 min read paid

So far, consumers haven’t read the recession memo. They are spending freely, according to MasterCard SpendingPulse, which found that retail sales grew by double digits, both online and offline, in September 2022. Excluding autos, off-line retail sales increased 11% y/y, and e-commerce sales rose 10.7% y/y. (The data are based on in-store and online retail sales across all forms of payment and are not adjusted for

Ed Yardeni

No Recession In Services

Oct 5, 2022 1 min read

Following today's release of September's nonmanufacturing purchasing managers index (NM-PMI), the Atlanta Fed's GDPNow tracking model revised Q3's growth rate from 2.3% (saar) to 2.7%. Consumer spending and real-gross private domestic investment were revised higher from 0.7% to 1.1% and from -4.1% to -3.6%. The next recession might be the most widely anticipated recession that doesn&

Ed Yardeni

Slow Moving Economy

Sep 15, 2022 1 min read

August's industrial production and inflation-adjusted retail sales reports today show that the US economy is growing, but just barely. The former was down a bit, while the latter was up a bit (charts below). Both are included in the Coincident Economic Indicators. Consumers went on a spending spree after the lockdown recession in early 2020. They spent mostly on goods because many services were still not open for

Ed Yardeni

CPI Tends To Overstate Inflation Relative To PCED

Sep 14, 2022 1 min read

August's CPI unnerved the stock market because its core inflation rate was higher than expected. August's PCED will be released on September 30 and is likely to show a lower rate of inflation. Consider the following: (1) The core CPI inflation rate tends to be higher than the core PCED. That's because the inflation rates of both durable goods (especially furniture & bedding) and

Ed Yardeni

Inflation Shocks The Markets

Sep 13, 2022 1 min read paid

August's CPI report shocked the financial markets. It was widely expected to confirm that inflation peaked around June based on the drop in gasoline prices during July and August and mounting evidence that durable goods inflation is moderating. The problem is that in the nondurable goods category of the CPI, food inflation remains high, offsetting some of the improvement in energy-related prices (table below). While overall goods inflation

Ed Yardeni

The Economic Week Ahead, September 12-16

Sep 10, 2022 1 min read

It's another action packed week ahead. On the inflation front, we are expecting that, on Monday, the FRB-NY survey of consumer inflationary expectations will show some moderation, reflecting the plunge in gasoline prices, while food inflation remained elevated. On Tuesday, August's CPI should do the same. August's NFIB survey of small business owners (released on Wednesday) is likely to show that lots of them

Ed Yardeni

One-Week Winning Streak

Sep 9, 2022 1 min read paid

The DJIA, Nasdaq, and S&P 500 snapped a three-week losing streak today. Why? After all, on Thursday, Fed Chair Powell in an interview at Cato Institute reiterate that the Fed won't back down on planned rate increases. "We need to act now, forthrightly, strongly as we have been doing, and we need to keep at it until the job is done," he said. "

Ed Yardeni

Divine Disinflation In NM-PMI Survey

Sep 6, 2022 1 min read

Investors are rooting for "divine disinflation." We all want inflation to come down without a painful recession. We want the Fed to tighten one more time by 75bps and then to pause for a while. This morning's release of August's survey of non-manufacturing purchasing managers was consistent with this wishful thinking. That might explain why the S&P 500 rallied after the report

Ed Yardeni

Peak Freight Rates As US Keeps On Trucking?

Sep 5, 2022 1 min read paid

US freight rates increased 28% y/y during July, but declined almost 2% m/m. That's according to the July Cass Freight report We expect that August's report, out in mid-September, will confirm that freight rates have peaked just as peak shipping season encompassing both back-to-school and the holidays begins.

Ed Yardeni

Lots Of Jobs, But...

Sep 2, 2022 1 min read

This morning's jobs report for August was a good one even though the unemployment rate rose to 3.7% from 3.5%. It did so because 786,000 workers entered the labor force, while the household measure of employment rose 442,000. The new entrants shouldn't have any problem finding jobs, while an increase in job seekers may take the pressure off employers to raise wages

Ed Yardeni

August's M-PMI: More Stag & Less Flation

Sep 1, 2022 1 min read paid

August's M-PMI provides confirmation of our economic outlook including a growth recession and moderating inflationary pressures. On balance, it should have been bullish for both bonds and stocks this morning, but the prices of both are down. That's because, today is the first day that the Fed is ramping up QT2, i.e., letting its balance sheet shrink by $95 billion per month. The composite M-PMI

Ed Yardeni

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