Michael Goodwell Profile picture
Trader. Equities, FX, FI, commodities. Macro, monetary and fiscal policy commentary. CB watcher. Not investment advice. Likes/RTs = endorsement.
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8 Apr
🇺🇸 US consumer credit for February 2021

🔹 Revolving credit (ie credit cards, personal lines of credit) rose $8.1 billion to $0.974 trillion.

🔹 Increase was the first in 4 months, and the most since December 2019.
🔹 Non revolving credit (ie student loans and auto loans) rose $19.5 billion to $3.231 trillion.

🔹 10th consecutive month of increases, and the most since June of 2020.
🔹 Total US consumer credit for February rose by $27.57 billion versus $2.8 billion estimate.

🔹 Highest gain since $29.225 billion in November 2017.
Read 4 tweets
7 Apr
💥 17.4% of American adults expect someone in their household to experience loss in employment income in next 4 weeks

🔹 According to the latest Household Pulse Survey, based on responses collected 3/3-15.

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🔹 39.1% of adults live in households where at least one adult substituted some or all in-person work for telework because of the coronavirus pandemic, based on responses collected March 3-15.

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🔹 8.8% of American adults lived in households where there was either sometimes or often not enough to eat in the previous 7 days, based on responses collected March 3-15.

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Read 6 tweets
5 Apr
🇨🇳 China looks to rein in lending to cool property boom

🔹 Small and foreign banks rush to ‘radically’ reduce loans that buoyed Covid recovery
Analysis: In China's small cities, home buyers suffer as debt-ridden developers fail to finish projects

- "Bond defaults by property developers quadrupled last year to 26.6 billion yuan"

(April 2nd)

reut.rs/3fGY6Tg
Read 4 tweets
5 Apr
Is the Hong Kong-US dollar peg about to break?

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Well no, that's the sensationalist take. In reality, the Hong Kong Dollar is pegged to a narrow trading band between HK$7.75 and HK$7.85 per US dollar.

The 36-year old peg has withstood the test of multiple market shocks.

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The HKMA buys and sells the currency at either limit to maintain the range. Buying HKD boosts it by reducing its availability and raises the costs of betting against the ccy. Sales do the opposite.

They also have $440bn in reserves - six times the currency in circulation.

/3
Read 5 tweets
2 Apr
Archegos blew up when ViacomCBS dropped to a level not seen since... mid January.

A $10bn (or $70bn+ with leverage) hedge fund collapsed when a stock that they were exposed to through TRS on fell 50%.

Is this a sign of widespread fragility or is this an isolated case?
Couple of great explanatory threads/comments on the whole Archegos/Credit Suisse debacle:

1.
Read 6 tweets
1 Apr
Is this relationship the most important one to watch for the economy and monetary policy this year?

It's ISM Manufacturing Prices vs CPI (% Chg. From Year Ago)

Are we going to see CPI following ISM higher, or is the relationship going to temporarily break, like in late 2009?
H/t @macro_daily for the highlighting this relationship.
Just as a follow on from this, long-end US Tsy yields - in this case the 10Y yields, seem to have a closer correlation to the headline CPI number, rather than the Core CPI number.

So we could see yields continuing higher, even if core CPI remains muted.
Read 4 tweets
16 Mar
US 20-Year Bonds - $24 billion reopening- Results:

- High Yield Rate: 2.29% vs prev 1.920% vs 6 auction avg. 1.509%

- Bid-Cover Ratio: 2.51 vs prev 2.15 vs 6 auction avg. 2.32

- WI: 2.31%

- Tail: 2bps vs prev. 2.3bps vs 6 auction avg. 0.5bps

1/3
- Dealers: 21.56% vs prev. 29.1% vs 6 auction avg. 25.0%

- Direct Accepted: 17.03% vs prev 16.0% vs 6 auction avg. 15.7%

- Indirect Accepted: 61.4% vs prev 54.9% vs 6 auction avg. 59.3%

2/2
Yields were rising going into the auction, but this was a strong auction. Yields hit lower.

Auction size of $24bn was 3rd largest 20Y auction on record.

3/3
Read 4 tweets
15 Mar
Cross Commodities Spec Positioning Report (via Marex Spectron), as of 15 Mar 2021

🔹 Heatmap of spec positioning estimates across the commodities complex, indicating how short / long the market is relative to its own history:

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Marex Spectron Spec Positioning Estimates for LME Copper:

🔹 All base metals saw length reduce in the week to Thurs 11th Mar.

🔹 The LME Copper net spec long has fallen from 62% of OI as at 25th Feb, a level not seen since 2004, to 41% of OI as at Thursday’s close.

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Marex Spectron Spec Positioning Estimates for WTI:

🔹 Spec length in WTI climbed to 9.6% of OI on the 17th Feb – a level not seen since 2018.

🔹 Had gradually reduced to 6.0% of OI last Thurs.

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Read 4 tweets
28 Feb
🇨🇳 China February (official) PMI - released today:

🔹 Manufacturing PMI 50.6 vs est 51.1 vs prev 51.3

- Missed expectations, lowest since May

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🔹 Non-Manufacturing PMI 51.4 vs est 52.0 vs prev 52.4

- Another miss, lowest since last Feb.

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🔹 Composite PMI 51.6 vs prev 52.8

- Another miss, lowest since last Feb.

3/3
Read 4 tweets
21 Feb
Moody's Research:

Too Much of a Good Thing?

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🔹 Ten-Year Treasury Yield Hardly Ever Quickly Approaches Nominal GDP Growth

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🔹 Breakneck Commodity Price Inflation Does Not Promise Rapid Core Consumer Price Inflation

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Read 4 tweets
21 Feb
I'm slightly confused here.

This recent inflationary rise in commodities, factory input prices, retail sales and other data was clearly forecasted by central bankers and economists.

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Everyone knew that thanks to base effects, supply constraints, and the initial demand surge from re-opening would lead to higher prices and inflationary pressures. CBs said they would look through this data as it would likely be transitory.

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Yet, here we are, panicking about inflation when we're only just starting to re-open.

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Read 4 tweets
19 Feb
ETF Fund Flows:

The $UVXY (ProShares Ultra VIX Short-Term Futures ETF) ETF has continued to see sustained inflows over the past few days.

Is this a record inflow over such a short period?

cc @EricBalchunas

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Bond ETF Inflows/Outflows:

- $LQD (iShares iBoxx USD Investment Grade Corporate Bond ETF)

- $HYG (iShares iBoxx USD High Yield Corporate Bond ETF)

- $TLT (iShares 20+ Year Treasury Bond ETF)

- $IEF (iShares 7-10 Year Treasury Bond ETF)

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ARK Group ETF Inflows/Outflows:

- $ARKK (ARK Innovation ETF)

- $ARKW (ARK Next Generation Internet ETF)

3/3
Read 5 tweets
14 Feb
Commodity Call - ANZ

🔹 Copper supercharged

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🔹 Copper remains in bull cycle

🔹 A sustained demand strength

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Copper continued...

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Read 6 tweets
12 Feb
🇬🇧 Series of UK headlines hitting tonight:

1. Social distancing rules in England could remain until autumn - The Times

🔹 “The thinking is that social distancing will need to be in place for a long time to come,” a Whitehall source said.

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thetimes.co.uk/article/social…
2. Stealth tax raid on personal allowances to raise £6bn - The Telegraph

🔹 Planned increases to £12,500 and £50,000 thresholds face axe in move that would mean tens of millions paying more.

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telegraph.co.uk/politics/2021/…
3. Fuel duty rise in next month’s Budget will a blow to the North, Chancellor Rishi Sunak warned - The Sun

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thesun.co.uk/news/14025424/…
Read 4 tweets
12 Feb
Hang on for wild oil, copper ride in commodity supercycle: Goldman's Currie

🔹 Oil has a 'lot of upside', copper prices already at supercycle levels

🔹 Supercycle reminiscent of 1970s spike rather than 2000s bull run

🔹 Supply crunch could play into shale, core OPEC+ hands

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'Key metals such as copper are already at supercycle levels and that the story has only just begun.'

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Supercycle origins and the shift in demand:

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Read 4 tweets
11 Feb
🛢️ Commodities May Have Just Begun a New Supercycle - JPM

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Prices may also jump as an “unintended consequence” of the fight against climate change, which threatens to constrain oil supplies while boosting demand for metals needed to build renewable energy infrastructure, batteries and electric vehicles.

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Read 4 tweets
9 Feb
US 3-Year Notes - $58BN auction - Results:

- High Yield Rate: 0.196% (prev 0.234%)
- Bid-Cover Ratio: 2.39 vs prev 2.52 vs 6mth avg 2.4

- WI: 0.196%

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- Dealers: 31.2% vs prev 33.2% vs 6mth avg 34.3%
- Direct Accepted: 16.0% vs prev 14.6% vs 6mth avg 13.8%
- Indirect Accepted: 52.7% vs prev 52.2% vs 6mth avg 52.0%

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Average auction. Auction size was joint largest on record.

Yield was lower than last month auction at 0.234%.

Bid-cover came in a slightly lower than average. The dealers were saddled with less than average.

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Read 4 tweets
9 Feb
It's interesting looking back at articles which were written when the yield curve (2s10s) inverted in August 2019.

There were a few people who wrote that the Fed will respond to prevent a recession, trade uncertainty and the lack of inflation was driving down yields.

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Famously, Yellen said that she doesn't think the US economy was heading towards a recession, although she did admit that the odds had clearly risen.

So was this time different? Well, obviously the answer is no.

Every recession since the 1980s has followed a 2s10s inversion.

2/
The yield curve inverted in mid-August 2019. According to the NBER, the recession started in February 2020 - a lag of just 6 months, the shortest lag compared to the last five recessions.

Before the 2020 recession, the average number of months was 17.

3/
Read 6 tweets
8 Feb
Central Bank Speeches schedule for the week ahead:
🇪🇺 ECB:

Monday, 8 February 2021: Christine Lagarde
Tuesday, 9 February 2021: Philip R. Lane
Wednesday, 10 February 2021: Fabio Panetta
Wednesday, 10 February 2021: Christine Lagarde
Thursday, 11 February 2021: Luis de Guindos

ecb.europa.eu/press/calendar…
🇬🇧 BoE:

Wednesday 10 February 2021: Andrew Bailey (at Mansion House

bankofengland.co.uk/news
Read 4 tweets
8 Feb
The Week Ahead

A slightly quieter week compared to last week, but still a decent amount of data releases on tap.

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Mon:

🇩🇪 German Industrial Production (MoM) (Dec)
🇪🇺🇩🇪 Sentix Investor Sentiment
🇺🇸 BRC Retail Sales Monitor (YoY) (Jan)
🇦🇺 NAB Business Confidence (Jan)
🇳🇿 Inflation Expectations (QoQ)

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Tues:

🇺🇸 JOLTs Job Openings (Dec)
🇦🇺 Westpac Consumer Sentiment
🇨🇳 CPI (Jan), PPI (YoY) (Jan)

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Read 8 tweets