Archive | December, 2016

The Widening Gap Between Europe’s ‘Hard’ and ‘Soft’ Data


Flash PMI data for Europe’s manufacturing sector, at 54.9 for December, paints an ever more positive picture, having surpassed the most recent high reached in early 2014 to retake levels not seen since 2011. The problem? Hard data (i.e. industrial production, released yesterday) isn’t keeping pace with the increasingly optimistic survey data. We’ll have to wait […]

Zew Survey Steady, but Looks More Like 2007 than 2013


The economic expectations component of Germany’s Zew Survey came in slightly lower than expected at 13.8 (steady, but undershooting consensus of 14.0). The current situation component remains firmly in positive territory, however, rising to 63.5–well above previous (58.8) and consensus expectations (59.1). Looking at the monthly data going back ten years, with data from each […]

Commercial Traders Are Big Time Buyers of Bonds


Commercial traders are net long more bond contracts than at any point since 1992 other than in the spring/summer of 2005 according to the latest data from the Commodity Futures Trading Commission. They were a bit early in 2005 but ultimately 10-year yields declined from 5.25% in 2006 to 2% in 2008. 5-year yields ultimately declined from […]

High Yield Spreads and Breakeven Inflation Moving in Lockstep


The high yield spread over the 10-year treasury has synced up to changes in breakeven inflation. These two series have had a strong negative correlation to one another since 2003 (when our data starts). The correlation between these two series has been -76%. However, over the past three years, the relationship has become even tighter […]