Summary of Financial Data and News From Last Week

Source:

http://creditbubblebulletin.blogspot.com/2021/11/weekly-commentary-accident-prone-end.html

Credit Bubble Bulletin
- Chronicling History's
Greatest Financial Bubble
Friday, November 12, 2021
by Doug Noland

My edited easy to read version follows
Ye Editor

For the Week Ending November 12, 2021:

S&P500 slipped 0.3% (up 24.7% y-t-d)

Dow declined 0.6% (up 17.9%)

Utilities fell 1.0% (up 6.6%)

Banks added 0.6% (up 43.0%)

Transports slipped 0.5% (up 34.0%)

S&P 400 Midcaps little changed (up 25.8%)

Small cap Russell 2000 retreated 1.0% (up 22.1%)

Nasdaq100 fell 1.0% (up 25.7%)

Semiconductors rose 1.0% (up 35.7%)

The Biotechs sank 3.2% (down 5.3%).

With gold bullion jumping $47, the HUI
gold syock index surged 7.4% (down 7.2%).

U.K.'s FTSE added 0.6% (up 13.7% y-t-d).
Japan's Nikkei was unchanged (up 7.9% y-t-d).
France's CAC40 increased 0.7% (up 27.7%).

German DAX added 0.2% (up 17.3%).
Spain's IBEX 35 declined 0.5% (up 12.5%).
Italy's FTSE MIB slipped 0.2% (up 24.7%)

Brazil's Bovespa rallied 1.4% (down 10.7%)
Mexico's Bolsa fell 1.0% (up 16.7%).
South Korea's Kospi unchanged (up 3.3%).

India's Sensex advanced 1.0% (up 27.1%).
China's Shanghai rallied 1.4% (up 1.9%).
Russia's MICEX fell 1.3% (up 25.3%).

US  BONDS:
Three-month Treasury bill rates
ended the week at 0.04%.

Two-year government yields
jumped 11 bps to 0.51% (up 39bps y-t-d).

Five-year T-note yields
surged 17 bps to 1.22% (up 86bps).

Ten-year Treasury yields
rose 11 bps to 1.56% (up 65bps).

Long bond yields
gained five bps to 1.93% (up 29bps).

Benchmark Fannie Mae MBS yields
jumped 16 bps to 2.05% (up 71bps).

Federal Reserve Credit last week
jumped $27.8bn to a record $8.558 TN.
Over the past 113 weeks,
Fed Credit expanded $4.832 TN, or 130%.

US  MORTGAGES:
Freddie Mac 30-year fixed mortgage rates
sank 11 bps to 2.98% (up 14bps y-o-y).

Fifteen-year rates fell eight bps to 2.27%
    (down 7bps).

Five-year hybrid ARM rates
slipped a basis point to 2.53%
   (down 28bps).

Jumbo mortgage borrowing costs
had 30-year fixed rates down 12 bps
to 3.05% (down 2bps).

COMMODITIES:

November 12
– Bloomberg
“Global supply woes from Brazil to Vietnam sent coffee prices to a seven-year high… with poor weather, freight snarls and higher fertilizer costs threatening to curb supply. Arabica futures for March delivery rose as much as 2.6% to $2.189 a pound…, the highest since Oct. 16, 2014. Prices have soared more than 90% in the past year.”

Bloomberg Commodities Index
was little changed
   (up 31.7% y-t-d).

Spot Gold jumped $47 to $1,865
   (down 1.8%).

Silver surged 4.8% to $25.32
   (down 4.1%).

WTI crude oil slipped 48 cents to $80.79
   (up 67%).

Gasoline declined 0.4%
   (up 64%)

Natural Gas sank 13.1%
   (up 89%).

Copper rallied 2.3%
   (up 26%).

Wheat surged 6.3%
   (up 29%)

Corn jumped 4.0%
   (up 21%).

Bitcoin rose $2,879, or 4.7%,
this week to $64,071
   (up 120%).

COMMENTARY  (ON  INFLATION):
The Consumer Price Index (CPI) was reported up a stronger-than-expected 0.9% for the month of October, pushing the year-over-year increase to a distressing 6.2% - the strongest gain since November 1990.

Ignoring the summer of 2008’s ($140 crude-induced) spike to 5.1%, this month’s 4.9% reading of University of Michigan Consumer One-Year Inflation Expectations was the highest since 1981.

Producer Prices (PPI) gained 0.6% during October, with PPI up 8.6% y-o-y.

Chinese Producer Prices were reported up a stronger-than-expected 13.5% y-o-y, their hottest inflation in 26 years.

Germany posted y-o-y consumer inflation of 4.6%, the highest in decades, with aggregate euro zone inflation at 4.1%.

Surging inflation is a global phenomenon.

SUMMARY  OF  NEWS:

Coronavirus Watch:

November 8
– Reuters
“Germany's coronavirus infection rate has risen to its highest level since the start of the pandemic…, and doctors warned they will need to postpone scheduled operations in coming weeks to cope. The seven-day incidence rate - the number of people per 100,000 to be infected over the last week - rose to 201.1, higher than a previous record of 197.6 in December last year…”

Market Mania Watch:

November 10
– Reuters
“Shares of Rivian Automotive Inc surged as much as 53% in its Nasdaq debut on Wednesday, giving the Amazon-backed electric vehicle maker a market valuation of more than $100 billion after the world’s biggest initial public offering this year. Rivian shares closed at $100.73, marking a nearly 30% jump from its offering price. That made Rivian the second most valuable U.S. automaker after Tesla Inc, which is worth $1.06 trillion.”

Market Instability Watch:

November 8
– Wall Street Journal
“The biggest selloff that China’s international junk-bond market has ever seen has wiped out around a third of bondholders’ wealth in just six months. The steep and rapid decline shows how regulatory curbs on borrowing, extremely dislocated credit markets, and slowing home sales have combined to pressure more Chinese property developers… The market endured another wave of selling late last week and on Monday, as investors even dumped bonds issued by financially stronger developers. On Friday, the yield on an ICE BofA index of Chinese junk bonds topped 25% for the first time since March 2009, near the height of the global financial crisis, and on Monday it rose further, to 26.6%.”

Biden Administration Watch:

November 6
– Reuters
“After a daylong standoff, Democrats set aside divisions between progressives and centrists to pass a $1 trillion package of highway, broadband and other infrastructure improvement, sending it on to President Joe Biden to sign into law. The 228-to-206 vote late on Friday is a substantial triumph for Biden's Democrats, who have bickered for months over the ambitious spending bills that make up the bulk of his domestic agenda. Biden's administration will now oversee the biggest upgrade of America's roads, railways and other transportation infrastructure in a generation, which he has promised will create jobs and boost U.S. competitiveness.”

U.S. Bubble Watch:

November 10
– Reuters
“The U.S. government… posted a $165 billion budget deficit for October, 42% lower than the $284 billion shortfall a year earlier as personal and corporate income tax receipts surged… The October deficit was $14 billion below the median estimate… Receipts for the first month of the federal government's fiscal year totaled $284 billion, up 19% and a record for the month of October. Individual tax receipts rose 18% to $214 billion, and corporate taxes rose 39% to $21 billion.”

November 12
– Wall Street Journal
“The U.S. economy has had more than 10 million open jobs since June, an extraordinary stretch of imbalance in the labor market that also includes record numbers of workers quitting their jobs. As of Nov. 5, there were a projected 11.2 million U.S. job openings, according to estimates from the jobs site Indeed, exceeding 7.4 million unemployed workers in the U.S. labor force last month. The so-called quits rate—a measurement of workers leaving jobs as a share of overall employment—was 3% in September, a record high…”

November 12
– Bloomberg
“U.S. consumer sentiment unexpectedly collapsed in early November as Americans grew increasingly concerned about rising prices and the inflationary impact on their finances. The University of Michigan’s preliminary sentiment index decreased to 66.8 from 71.7 in October… Waning confidence reflects ‘an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation,’ Richard Curtin, director of the survey… Consumers expect inflation to rise 4.9% over the next year, the highest since 2008…”

November 9
– CNN
“American households are carrying record amounts of debt as home and auto prices surge… Between July and September, US household debt climbed to a new record of $15.24 trillion, the Federal Reserve Bank of New York said… It was an increase of 1.9%, or $286 billion, from the second quarter of the year.”

November 8
– Bloomberg
“Homeowners are taking advantage of a global housing boom by pulling equity out of their homes at the highest volume since the financial crisis. In the U.S., homeowners withdrew $63 billion in equity from their properties through more than 1.1 million cash-out refinances in the second quarter of the year — the largest quarterly volume since mid-2007, according to… Black Knight. Just under one in five American homeowners say they have pulled money out of their properties in the last year, according to a survey in late October by… Harris Poll, with another 18% saying they are considering it.”

November 10
– Bloomberg
“The punishing price gains of the pandemic-era housing market are showing signs of easing. In the third quarter, the median price of an existing single-family home in the U.S. rose 16% from a year earlier to $363,700, the National Association of Realtors said… The rate was 23% in the second quarter. About 78% of 183 metropolitan areas measured had double-digit increases, down from 94% in the previous three-month period. The brutal bidding wars brought on by the pandemic housing frenzy are easing up in some areas as more owners list their homes for sale.”

Fixed-Income Bubble Watch:

November 9 – Bloomberg
“U.S. high-yield bond sales reached an annual record of $432.4 billion... Cheap funding costs have unleashed a prolonged pile-on of debt issuance, and borrowers have been hurrying to take advantage of the opportunity before the Federal Reserve eventually raises interest rates. That could come sooner than expected amid inflation pressures…”

China Watch:

November 11
– Reuters
“Cash-strapped developer China Evergrande Group once again averted a destabilising default with a last minute bond payment but the reprieve did little to alleviate strains in the country's wider property sector… Although the developer managed to sidestep imminent disaster, woes in the country's $5 trillion property sector showed no signs of abating with a wall of debt coming due.”

November 8
– Bloomberg
“Not even state-owned firms are safe from the deepening rout in Chinese developer bonds. Sino Ocean Group…, part-owned by the finance ministry, has become the latest property company to see its bonds slump. Its 4.75% note due 2030 fell Monday to as low as 73.48 cents on the dollar, with spreads over comparable Treasuries widening to a record 800 bps…”

Emerging Markets Watch:

November 10
– Bloomberg
“Brazil’s inflation sped up more than expected in October, spurring bets that the central bank will hike interest rates by as much as 2 percentage points in response to government plans for greater spending. Annual inflation accelerated to 10.67%, above all estimates… Consumer prices rose 1.25% from the month prior… It was the biggest rise for the month of October in nearly two decades. Policy makers have raised the interest rate by 575 bps since March amid surging cost of living increases.”

Japan Watch:

November 10
– Reuters
“Japan’s wholesale inflation hit a four-decade high in October, following a similar spike in China’s factory gate prices as supply bottlenecks and rising commodity costs threatened Asian corporate profits. The rising cost pressures, coupled with a weak yen that inflates the price of imported goods, adds to pain for the world’s third-largest economy as it emerges from the consumer slump caused by the pandemic… The corporate goods price index (CGPI), which measures the prices companies charge each other for their goods and services, surged 8.0% in October from a year earlier, exceeding market expectations for a 7.0% gain…”

November 9
– Reuters
“Japanese manufacturers' business confidence fell to a seven-month low in November due to ongoing supply shortages, while sentiment in the services sector hit a three-month high on easing coronavirus curbs, the Reuters Tankan poll showed. The mood among manufacturers deteriorated for the third month…”

Geopolitical Watch:

November 8
– Bloomberg
“China's armed forces are capable of blockading Taiwan's key harbours and airports, the island's defence ministry said…, offering its latest assessment of what it describes as a ‘grave’ military threat posed by its giant neighbour… Taiwan's defence ministry, in a report it issues every two years, said China had launched what it called ‘gray zone’ warfare, citing 554 ‘intrusions’ by Chinese war planes into its southwestern theatre of air defence identification zone between September last year and the end of August.”

November 10
– Reuters
“China's foreign ministry said… that a visit to Taiwan by a U.S. congressional delegation violates the One China policy, and that the United States must immediately stop all forms of official interaction with Taiwan. It is a dangerous game to collude with pro-independence forces in Taiwan, Wang Wenbin, a spokesman at the Chinese foreign ministry, said…”