The Closer – Worst Week, 40%+ Sectors, Z.1 – 12/7/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick off with a preview of tomorrow’s payrolls number and a check in on seasonality (page 1). We then check in on sector performance year to date, namely the nearly 50% gains of Tech and Communication Services (page 2). We finish with a rundown of the latest household net worth survey from the Federal Reserve (page 3 and 4).
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Bespoke’s Weekly Sector Snapshot — 12/7/23
Chart of the Day – Fool’s Gold
Seasonal Surge in Claims
This morning’s release of Jobless claims came right in line with estimates of 220K and is only marginally higher than last week’s upwardly revised number of 219K. On a four-week moving average basis, claims have totaled 220.75K, matching the level from three weeks ago.
As we noted last week, before seasonal adjustment, claims usually increase throughout the final months of the year, but the Thanksgiving holiday likely caused an unusual drop off in claims last week. Claims were back up this week with an increase to 293.5K which is the highest level since the start of the year. Versus comparable weeks of the year, that is the highest reading since 2018.
Over the past few months, continuing claims have more consistently been grinding higher with last week marking the highest level in two years. The latest reading showed a modest pivot lower in continuing claims down to 1.861 million and matches the April high of 1.861 million.
Bespoke’s Consumer Pulse Report — December 2023
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.
Bespoke’s Morning Lineup – 12/7/23 – Bad Gas
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“With confidence in our armed forces with the unbounding determination of our people we will gain the inevitable triumph so help us God.” – Franklin D. Roosevelt
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s been a mixed start to the week for indices like the Nasdaq and Russell 2000 while the S&P 500 has been down for three straight days. This morning, futures are flat with a slight positive bias. Overnight in Asia, stocks traded lower on reports that the BoJ is gearing up for rate hikes. That led to a spike in yields and the yen and a decline of over 1% in the Nikkei. In Europe, the declines haven’t been as steep as GDP for the region declined 0.1% which was in line with forecasts, although Industrial Production in Germany unexpectedly declined.
Less than three months ago, the price of a gallon of gas in the US was pushing $3.90 and was up 21% on the year, and the price of crude oil was near $95 per barrel. Since then, crude oil prices have tumbled below $70 per barrel (as of yesterday’s close), and a gallon of gas is $3.20 which is down 17.5% from its peak and down slightly on the year. Next week’s CPI report on Tuesday and the subsequent FOMC report should be interesting.
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The Closer – WTI Below $70, NBP, Job Postings – 12/6/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start out with a look at the moves in WTI and gasoline (page 1) followed by a review of the latest EIA data (page 2). We then check in on the National Bank of Poland and Bank of Canada (page 3) before finishing with a look into the latest job postings data (pages 4 and 5).
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Daily Sector Snapshot — 12/6/23
Fixed Income Weekly — 12/6/23
Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit each week. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed-income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation, and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1-year return profiles for a cross-section of the fixed income world.
Our Fixed Income Weekly helps investors stay on top of fixed-income markets and gain new perspectives on the developments in interest rates. You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes for the next two weeks!
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“big” Drops in Treasury Yields
Relative to where they were just over a month ago, Treasury yields are down sharply as bond prices have rallied. Earlier today, we posted on X that the iShares 20+ Year Treasury ETF (TLT) has nearly fully erased what was a 14% YTD decline as of 10/19 on a total return basis. The Treasury rally can also be seen loud and clear in the chart of the 10-year yield below where yields have gone from just over 5% to just over 4.1%.
Although yields are down sharply, the current decline in yield for the 10-year still doesn’t rank as the largest since the Fed first started hinting at higher rates in late 2021. In both August 2022 and April 2023, the 10-year yield experienced a drawdown of more than 90 bps, although neither of those declines in yield reached triple digits (one full percentage point). For this current rally in Treasuries to translate into the largest decline of the current cycle for the 10-year, it would need to fall to 4.05%, or seven basis points (bps) from current levels.
