In case you missed it.. Japan’s economy expanded 1.1% in the second quarter on an annualized basis, missing expectations for 2% growth as softer domestic demand offset strong exports.
This is the first full quarter to include the impact of the Iran war, which has brought energy prices higher for business and households. Source: CNBC
Just 8% of U.S. consumers expect their income to outpace inflation next year.
Source: Hedgeye Bloomberg
If you ever doubted how big a deal stablecoins were regarding lowering shorterm borrowing costs, this is for you. Since Stablecoin Act, issuance strongly negatively correlates with yields.
Now, market cap is shrinking & yields are on the rise. Coincidence? Source: Tidal Macro
In the month of July, the US Government collected $334 Billion. Just one problem…
They spent $766 Billion. A $432 BILLION deficit. In one month. Source: Geiger Capital
US inflation continued to cool in July, broadly in line with expectations.
US CPI confirms disinflation is continuing, not accelerating. Headline CPI: 0.1% MoM, in line with 0.1% consensus Core CPI: 0.2% MoM, in line with expectations Headline CPI: 3.4% YoY, unchanged Core CPI: 2.5% YoY, down from 2.6%. Lowest since March 2021. Real average hourly earnings: +0.2% YoY Energy fell 1.5% in July, and gasoline dropped 2.9%. Core goods inflation remained contained at 0.2% YoY. There is no inflationary case for a rate hike. At least at this stage. The absence of an upside inflation surprise was enough to reassure markets, with US equity futures moving higher following the release. On the less positive side: 1/ Inflation is still above target 2/ Further relief might be difficult to achieve if war in Iran keeps going Source. Daniel Lacalle
The futures market is now pricing just under one Fed rate hike by year-end
Source: Hedgeye, Bloomberg
Yesterday, the 10-Year Treasury Note Auction drew an interest rate of 4.683%, the highest since the run-up to the Global Financial Crisis
Source: Barchart
The US is now borrowing money to pay interest on money it already borrowed
US federal interest costs have reached roughly $2.85 billion per day, more than $1 trillion a year. That’s around 14% of federal spending and now rivals or exceeds some of Washington’s largest spending categories. Meanwhile, US national debt has crossed $40 trillion. The problem is not just the size of the debt. It’s the cost of refinancing it. The US continuously rolls over maturing debt by issuing new Treasuries. But much of that debt was originally issued when interest rates were significantly lower. Now it is being refinanced at much higher yields. The 30-year Treasury recently reached 5.27%, its highest level since 2007. That creates an increasingly uncomfortable cycle: Higher rates → higher interest costs → larger deficits → more borrowing → even higher interest costs. And this doesn’t stop in Washington. Treasury yields are the foundation of the US financial system. Higher government borrowing costs ultimately feed into mortgages, corporate debt, car loans and business investment. The debt problem is increasingly becoming an interest-rate problem. Source: Bull Theory
