Halyard’s Weekly Wrap – 8/25/23

Former St. Louis Bank fed president James Bullard attempted to steal the thunder from the Fed’s feel good summer meeting in Jackson Hole with his Thursday missive of accelerating growth and the need for the Fed to continue with rate increases. We asked Mr. Bullard to point to the 5 most recent economic indicators that are accelerating – He didn’t respond to Halyard’s questions.

Following last week’s retail sales beat, the only indicators to surprise to the upside were new home sales and jobless claims. Halyard would describe the economic data as “fair to middling”.

Existing home sales, which are 5x more than new home sales, fell again and are 7.2% lower year to date. Durable goods and PMI surveys both underwhelmed.

Halyard’s Weekly Wrap – 8/18/23

Retail Sales for July rose 1.0% over the previous month, much higher than the 0.4% that was expected, although pundits attributed the upside surprise to the Amazon Prime day which was hosted mid-month. The worry is that those sales pulled forward future sales and there will be a giveback in August and September. Looking back on the Prime Day effect on monthly retail sales shows no pattern of an uptick in the month of the sale and no pattern of a drop off in sales in the following month so we caution against assuming retail sales will drop in September and/or August.

July 2023 – Monthly Commentary

There’s a lively debate between those that believe that economic growth is slowing and those that believe it’s reaccelerating. The actual outcome will have a marked impact on the progress made to date on inflation. Clearly, employment growth has slowed from the torrid pace witnessed earlier this year. The July nonfarm payroll report registered the first back-to-back sub-200,000 growth since December 2020. Similarly, the jobs availability measure (JOLTS) has contracted to less than 10 million from the 12 million touched earlier this year. But with 9.5 million unfilled jobs still available it seems unlikely that the economy is on the verge of a significant stumble. On the other hand, retail sales for July paint a picture of a confident consumer seemingly unworried about income and willing to spend. That creates a conundrum for economists. Clearly certain industries, namely housing and autos, have slowed down or are in outright recession, but that has failed to impact consumption.

Halyard’s Weekly Wrap – 8/11/23

As we close out the second week of August, the summer doldrums have set-in on the capital markets. This week was mostly devoid of breaking economic data, save for the inflation indices released yesterday and this morning. CPI was mixed, with the year-over-year measure ticking up to 3.2% from the 3.0% logged last month, but on the month-over-month core inflation registered 0.2% for the second consecutive month, the smallest back-to-back gain in more than two years. The Producer Price Index showed similarly subdued results, drawing a collective “Ho Hum” from traders happy to let August drift by with limited volatility.

Halyard’s Weekly Wrap – 8/4/23

The July employment report showed that the economy generated 187,000 jobs in the period versus consensus expectation of 200,000 while recording a downward revision to the two prior months totaling 49,000. Wage growth as shown by average hourly earnings remained solid for the month – indicating that the slowdown in hiring is a reflection of a tight labor supply. Two Fed officials spoke post the non-farm payroll report and both indicated that the path of employment and inflation were heading in the right direction and that dialogue may shift from whether to raise rates to how long do rates need to remain at the current level. Bond prices rose in a relief rally, removing the past week’s rise in the yields in 2yr and 5 yr Notes.