Bloomberg Intelligence: U.S Consumer Confidence Falls, Macy’s Closures
Feb 27, 2024
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Topics discussed in the podcast include U.S. Consumer Confidence data, Macy's earnings, Exxon and Cnooc bidding for Guyana stake, energy sector insights, and Fed commentary on interest rates.
Strong investor interest in corporate bonds indicated by record sales and positive auction trends.
Expectations for inflation may not be decreasing rapidly, impacting Treasury yields and potentially leading to a significant rally.
Deep dives
Investor Interest in Corporate Bond Sales and Strong Demand
Record corporate bond sales and a solid takedown indicate strong investor interest in the market, with bid-to-cover ratios and indirect bidders showing positive trends. This suggests that buyers are present, especially in response to the larger auction sizes.
Market Expectations for Inflation Data Release
Expectations for the upcoming PCE deflator data indicate a belief that inflation may not be decreasing as rapidly as previously seen. The 10-year Treasury yield reflects this outlook at around 4.25%, with positioning potentially still leaning towards the short side.
Trends in Treasury Yields and Year-End Projection
Current 10-year Treasury yields at 4.28% may be subject to a significant rally by year-end, possibly pushing yields below 3.5%. Anticipated slowing of the economy, potential rate cuts, and signs of a conservative Fed stance contribute to this forecast.
Interplay Between Rising Yields and Equity Markets
The rise in yields, particularly for the two-year, could eventually impact equity markets, potentially denting valuations as rates climb. The relationship between interest rates and equities may hinge on economic conditions, profitability trends, and valuation considerations over the next several months.
Dana Peterson, Chief Economist at the Conference Board, joins to discuss the latest U.S Consumer Confidence data from the Conference Board. Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses Macy’s earnings. Fernando Valle, Bloomberg Intelligence Senior Oil and Gas Analyst, discusses Exxon and Cnooc exploring a bid to snatch Guyana stake from Chevron. Haag Sherman, Chief Executive Officer and Chief Investment Officer of Tectonic Holdings, joins to discuss the energy sector. Ira Jersey, Bloomberg Intelligence Chief US Interest Rate Strategist, joins to discuss his latest Fed commentary.