January 29, 2019 11:10 a.m. Loss of Confidence is a Gain for Treasuries -by- Lester Murray
An unexpectedly large fall in Consumer Confidence and the slowest growth rate for U.S. Home Prices in four years have combined to buoy bond prices while renewed optimism over tariff-war resolution has similarly boosted equity prices.
According to the CoreLogic Case-Shiller 20 City House Price Index, home prices rose by 0.3% in November, and while still an increase, it's the smallest such monthly increase since early in 2015. Meanwhile, the Conference Board reported that its Consumer Confidence Index fell to 120.2 from 128.1 when it was only "supposed" to fall to 124. This decline mirrors a previously released report from the University of Michigan and its Index of Consumer Sentiment.
As lunchtime approaches, the Ten-Year Treasury has gained a handful of 32nds resulting in a two basis-point drop in yield to 2.72%. The price gains in the bond market are happening in the face of another big supply day for the Treasury. In addition to $26B 52 week bills, the Treasury is selling $20B Two-Year Floaters and $32B Seven-Year notes. That's a lot of bonds.
As the government becomes un-shut down, the Bureau of Economic Analysis and the Census Bureau are back at gathering and reporting data, but the flash estimate for Q4 GDP along with Personal Income & Personal Spending (including the PCE inflation numbers), will be delayed until February 5. That, unfortunately, is not in time for the FOMC meeting which begins today and ends tomorrow.
Posted on Tue, January 29, 2019
by Lester Murray