Energy Prices SOAR As US Treasury Yield Curve Swoons (Gold Almost At $2,000 As Bankrate’s 30Y Mortgage Rate Declines To 4.10%)

WTI Crude Oil spot price was up 91% from the beginning of 2021 to the Russian invasion of Ukraine. Now it is up 142% thanks to the invasion of Ukraine.

Energy prices are still soaring with UK Natural Gas prices up another 34.70% today with Brent Crude futures up 3.34%. Wheat futures are up 7.03%.

The US Treasury 10Y yield rose 6.8 bps this morning (UK takes the lead with a 10.3 bps increase).

The US Treasury 10Y-2Y yield curve slope continues to swoon to where it is now flatter than when President Biden entered office.

Gold is now at it highest level since before Biden was sworn-in as President as WTI Crude Oil soars.

Gold hit $2,000 before retreating back down.

And Bankrate’s 30Y mortgage rate declined to 4.10%.

Russia is the world’s largest exporters of wheat and Ukraine is the 5th largest exporter.

Putin: “No wheat for you!”

Weekend Update II: Russian Bonds, Stocks, Ruble And Oil Exports Crash (But Russian 5Y CDS Drops To 554)

Russia is still engaged in its invasion of Ukraine. And the US continues to import crude oil from Russia. In fact, US crude oil imports from Russia soared under Biden only to decline again in December 2021.

On the sovereign bond and currency front, the 5.25% coupon Russian international sovereign bond has crashed to 22.494. And the Ruble/USD cross has crashed as well.

Sberbank Bank 5 1/8% corporate bond has crashed to 25.

The Russian blue-chip stock market (OTOB Russian Traded Index CRTX) has crashed by over 50% since the invasion of Ukraine.

Fortunately, I like Cheerios for breakfast made from oats, since wheat futures are soaring.

Russia’s Credit Default Swap (CDS) 5Y has dropped to a still-elevated 554.

The US really needs to ban Russian crude oil imports, since Biden’s failed in game theory by cutting US energy exploration on Federal lands and offshore drilling.

War is hell, as Vlad “The Ukrainian Impaler” Putin has demonstrated.

Hey Bartender! Jobs Report Friday … The Good? 678k Jobs Added, The Bad? 0% Growth In Earnings (MoM), The Ugly? Inflation Is 7.5% (REAL Wage Growth Is -2.4%) WTI Crude UP 4.37% Overnight

Today’s jobs report is a mixed-bag. According to the February Bureau of Labor Statistics (BLS) report …

The good: 678k jobs were added.

The bad: Month-over-month wage earning experienced 0% growth (although YoY growth declined to 5.1%).

The ugly: inflation is still at 40 years highs of 7.5%. Meaning that REAL wage growth is -2.4%.

Here is the jobs report summary.

Of course, the leading sector for job creation was … leisure and hospitality with 179k added. Food services and drinking places (aka, bars) added 124k jobs.

Energy prices are way up … again … which will fuel more price increases. WTI Crude is up over 4% overnight, NYH gasoline futures are up 4.33%, coal is up 22.48%.

Hey bartender! You are the leading job addition.

At least the 30-year mortgage rate is down slightly. Why? Fed Stimulypto is still in place!

Inversion: Russia’s Sovereign Yield Curve Inverts As Technical Default Occurs (Russia’s Foreign Bond Sinks To 21.75) Biden Releases 1 1/2 Days Of Strategic Oil Reserves To Lower Prices

The US still has a steeply upward-sloping yield curve, but Russia has the exact opposite: a steeply downward-sloping or inverted yield curve.

Here is a comparison of the US Treasury Actives curve (steeply-upward sloping) compared to Russia’s sovereign curve (steeply-downward sloping).

Russia’s technical default on international bonds has led to its 5.25% coupon international bond (denominated in Euros) to plunge from 131.6 in September 2022 to only 21.75 this morning.

Commodity prices? Commodity prices saw the biggest one-day gain in 13 years on Tuesday.

Between Biden’s anti-fossil fuel executive orders and the Russian invasion of Ukraine, gasoline futures are up 126% since the start of January 2021.

Biden is tapping the US strategic oil reserves releasing 30 million barrels. Unfortunately, this amounts to only 1 1/2 days of US oil consumption. Instead of “Release the Kraken!”, Biden is releasing a Petit Basset Griffon Vendéen. Woof.

This reminds me of “Does your dog bite?”

Powell Backs A Quarter-point Rate Hike In March Meeting, 10Y Treasury Yield Rise By 11 BPS, UK Natural Gas UP 35% (Taylor Rule Suggests A Target Rate Of 13.40%)

Like the old E.F. Hutton ads, when Fed Chair Jerome Powell talks, people listen.

Stocks rose, while bonds fell after Jerome Powell said he was inclined to back a quarter-point U.S. rate hike in March to combat inflation that is “too high.”

In a broad-based equity rally, financial and industrial companies led gains in the S&P 500. The two-year Treasury yield — which is more sensitive to imminent Federal Reserve policy moves — was near 1.5%. The Fed chief also noted that the central bank is prepared to be more aggressive if inflation is more persistent than expected, while adding that he’s open to “series of rate increases” in 2022. Investors also assessed the latest geopolitical developments, with oil paring gains after earlier topping $110 a barrel.

WTI Crude futures are up to $107.05 a barrel.

Natural Gas (UK) rose 34.58% to 100.28. Wheat is 7.62% to $1,059.

The 10-year Treasury yield jumped 11 Basis Points on Powell’s comments. And Eurozone yield are up nearly the same amount.

Powell signalling a more moderate rate expansion led to the Dow rising over 500 points (up 1.65%).

Based on core PCE growth of 5.21%, the Mankiw specification of the Taylor Rule model infers that The Fed Funds Target rate should be … 13.40%. Since The Fed’s target rate is only 25 basis points, a 25 basis point increase is modest indeed.

Mortgage rates are down slightly today, but you can see the separation between The Fed’s target rate and the 30-year mortgage rate.

My State Of The Union Rebuttal: WTI Crude UP 126% Since Jan 1, Gasoline Prices UP 61% (GDP Near Zero, Inflation Still Rising)

President Biden is giving his first State of the Union address tonight with rebuttals from Iowa Governor Kim Reynolds and The Squad’s Rashida Talib (yes, a Republican is giving the rebuttal to Biden’s SOTU speech, and a Democrat is rebutting a Democrat President??)

Let’s look at a short list of Biden’s economic triumphs. I will ignore Biden’s catastrophic Afghanistan withdrawal and his weak response to the Russian invasion of Ukraine.

If you want higher oil and gasoline prices, Biden is a tremendous success.

If you like rampant government spending, then Biden is your man. Home price growth is up to 18.84%, making housing unaffordable for millions of American families.

Wages? They are up, but declining after 7.5% YoY inflation. And GDP is almost zero.

Biden can only point to rising average hourly wages, but not REAL average hourly wages.

Inflation? Highest in 40 years, due to excessive Federal spending, The Fed’s crazy printing and Biden’s energy mandates.

I am scratching my head to think of accomplishments for Biden to mention in the SOTU. But I am sure that he will say something positive. Otherwise, Biden’s SOTU speech should be the Billy Preston song “Nothing from Nothing.“

US 30-year Mortgage Rate Rises To 4.30% As 10-year Treasury Yield Plunges -8.2 BPS (Eurozone Yields Dropping Like A Rock)

As someone who needs to move to Ohio, I would really appreciate it if mortgage rates would more closely follow the 10-year Treasury yield. But alas, Bankrate’s 30-year mortgage rate just rose to 4.30% as the US Treasury 10-year yield dropped -8.2 basis points.

Europe. Middle East and Africa (EMEA) sovereign yields are all down over 10 basis points averaging around -15 bps.

Ukraine’s 10-year yield has plummeted by -48.3 bps this morning.

The anticipated meeting between Russia and Ukraine on Belarus soil was a failure. Likely due to Belarus showing-off their modern air force capabilities.

Oh Atlanta! Atlanta Fed GDPNow Q1 Forecast Drops To 0.631% With REAL Wage Growth At -2.38% (Coal Is SOARING!)

Oh Atlanta! Fed, that is.

The Atlanta Fed GDPNow Q1 real-time GDP index fell to 0.631%. And the Atlanta Fed REAL wage tracker fell to -2.38 growth.

Volatility reigns supreme on the energy front (look at NYM Dubai crude AVAT!) And coal is up 18.68% this morning.

Here is a map of gas and oil pipelines in Europe.

US Trade Balance Widens To All-time High, Rise In Imports, Drop In Exports (10Y Treasury Yield Sags To 1.884%, Russian Ruble Getting Clobbered)

The U.S. merchandise-trade deficit unexpectedly widened in January to an all-time high, reflecting a record value of imports and a drop in shipments overseas.

The shortfall grew to $107.6 billion last month from $100.5 billion in December, according to Commerce Department data released Monday.

Meanwhile, the US Treasury 10Y yield fell to 1.884%.

The cost for shipping from the US to China has surged.

Meanwhile, the Russian Ruble is getting clobbered.

At least Putin hasn’t put himself on Russian currency … yet. Or nyet.

Weekend Update: US Q1 GDP Falls To 0.6%, Treasury 10Y-2Y Curve Flattens and Commodity Prices UP 52% Under Biden (Ports Still Clogged)

Russia is still attacking Ukraine and I am still seeing stories about actor/comedian Bob Saget’s cause of death. So now for something completely different.

After last week’s Personal Consumption Expenditures, GDP and new home sales reports, the Atlanta Fed’s GDPNow real GDP estimate for Q1 shriveled to 0.6%.

The US Treasury yield curve? It is flattening rapidly as it typically does prior to a recession.

Commodities? Commodity prices are UP 52% under Biden. And that includes prices dropping slightly from 2/24 to 2/25.

And then there is average port delays in US ports. Hey, I thought Mayor Pete the port Czar was supposed to unclog the ports!

Hopefully this coming week will be better! Particularly for the Ukrainian people.