Jobless claims figures showed that the labor market is resilient, signaling to traders that the hope for rate reductions looks dimmer and dimmer these days. The cost of labor is high and sticky, like rates. Thus, duration assets are down. Applications for unemployment benefits fell to the lowest level since Feb, and initial claims declined as well. This has caught some investors by surprise.
Powell a number of times has said that he would rather have unemployment tick up than inflation stay high, so traders are recalibrating their bets. BBG is out with a story on how a hedge fund was down over -15% due to wrong rate bets, with the same fund down -48% YTD.
ASR is out with a good piece on how higher rates in the US have pressured borrowing. Obviously, that makes sense. Risky businesses can’t get the leverage they want. Solid businesses may think twice about taking on more expensive debt.
How much you want to bet the timing of Xi’s move was on purpose? There’s concern that China will extend its iPhone ban….right before Apple’s new release mid-month. It looks like over $190bn of market value got wiped out in 2 days with this move. Basically, the gov doesn’t want the phones used in sensitive departments/agencies—and now state-owned enterprises and other government-controlled places. Being a massive market for Apple, in terms of customers and manufacturing, it will be hard for international companies to invest so much in China, knowing that prospects could change so quickly.
BBG is out with a story on how the US and the EZ are working on an agreement for new tariffs on excess steel production from China and other countries.
Six potential issuers are trying to sell new US IG bonds, which will take demand away from Treasuries. 30 companies have come to the US primary market in just the last 2 days, according to BBG.
Insurance costs in FL have tripled in the past few years, according to BBG, with some insurance companies just dropping coverage there. They use the term “climate gentrification” to note areas where it costs so much to ensure, that it prices out certain people.
That’s what remaining employees are doing at Grindr, after almost half of employees left in response to a return-to-office policy. If you had any questions about the priorities of many workers these days, this is a good example. Sure, they’ll be on profits next earnings announcement, but could you imagine losing half of your employees?
China added to its gold reserves for a 10th straight month, furthering its move to get away from the USD reliance.