Eurodollar University

The discussion dives into the significant data revisions that cast a troubling shadow over the economy. With plunging Treasury bill yields signaling a potential Fed rate cut, market interpretations clash with hawkish rhetoric. Sharp drops in hiring and rising layoff announcements reveal labor market weaknesses. Revisions of key economic indicators further suggest that current data may be overstating economic strength. The implications point towards likely further cuts from the Fed, despite the uncertainty from policymakers.

The recent labor market is experiencing a significant downturn, with a shocking drop in private payrolls and the six-month average turning negative for the first time. This situation is closely tied to a struggling housing market, where home prices have dropped consistently over recent months. Meanwhile, new homes are now selling at discounts compared to existing ones, a rare occurrence in the last 50 years. The cycle of job losses is leading to weaker housing demand, creating a feedback loop that raises questions about future Federal Reserve policies.

Procter & Gamble has issued a stark warning about declining U.S. sales, reflecting a troubling trend for consumer products. Recent consumer sentiment surveys reveal record-low expectations, indicating widespread economic concern. The analysis delves into a K-shaped recovery, where some thrive while others struggle. Holiday shopping data shows consumers are paying more but receiving less, leading to potential inventory issues. This weakening consumer behavior could impact Federal Reserve policies and future spending patterns.

December kicks off with a risk-off atmosphere in financial markets, highlighted by Bitcoin's steep drop. The Chicago ISM report reveals a shocking decline in new orders and employment, raising concerns about economic health. The national ISM manufacturing index also shows contraction, while S&P Global uncovers a troubling inventory surplus. Trade finance risks and ratings warnings add to the unease, indicating potential strain across North America. The discussion wraps up by linking these trends to pressures on Bitcoin and stocks.

HP becomes the latest big name to announce major layoffs, said to be around 6000 more white collar jobs. It’s getting to the point where despite all the mainstream and social media attention, call it fixation, on the tariff inflation faction at the Fed, the latest economic update from the central bank has almost nothing in it about that. Instead, it’s cover-to-cover with worries about HP, Amazon, and all the smaller businesses we never hear about who nonetheless are finding themselves on the same part of the flat Beveridge curve. Eurodollar University's conversation w/Steve Van Metre---------------------------------------------------------------------------------------------------------------------Eurodollar University's EARLY BLACK FRIDAY SALEGet our DDA+ subscription including the DDA, a membership, and the Daily Briefing for one ultra-low price. Not only that, we'll also include the Substack One Big Weekly Theme subscription to. Huge value and huge savings. https://https://www.eurodollar.university/black-friday-2025---------------------------------------------------------------------------------------------------------------------https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

China's massive Treasury sell-off signals deeper economic issues, highlighting a shift in global monetary dynamics. Rising repo volumes reveal tightening eurodollar conditions, contrasting with stock market highs. Jeff discusses how governments, like China, are raising dollars during economic stress, while private foreign buyers offset official sales for safety. The implications of collateral frictions and the dangers of using riskier assets in resales are also examined, raising concerns about systemic stability.

The resurgence of the repo market takes center stage, highlighting its importance as we approach the holidays. Tensions rise in the hedge fund and private credit landscapes, revealing vulnerabilities tied to questionable rating practices. Recent Fed borrowing raises eyebrows, as does the shift in the yield curve, signaling potential deflation. The discussion dives into the tug-of-war between banks and shadow banks, emphasizing the implications of ratings arbitrage. Join in for a fascinating exploration of these financial intricacies!

The discussion dives deep into the bond market's surprising reactions, showcasing strong auction demand despite falling yields. As 10-year rates inch closer to 4%, insights reveal that Fed rhetoric on tariff inflation isn't swaying market expectations. A concerning drop in consumer confidence aligns with the bond signals, while recent retail sales data highlights ongoing economic weaknesses. Additionally, soft producer prices and inflation indicators suggest that the fears of tariff-driven inflation may be overblown, setting the stage for intriguing future trends.

India's rupee hit a record low, surprising many as there seemed to be no clear trigger. The central bank's interventions failed to stabilize the currency, sparking discussions on the impact of global factors. Historical trends reveal the rupee often reflects broader eurodollar dynamics. Analysts highlight India's struggling CPI and the looming threat of deflation. Meanwhile, the South Korean won approaches intervention triggers, amid concerns about political stability and dependency on US dollar demand. The rising dollar signals global risk aversion, with implications for housing markets too.

A staggering 53% of American homes lost value in the past year, marking a return to trends last seen during the 2010-2012 bust. While mortgage rates have dropped, they haven't revived the housing market due to deeper issues with jobs and income. Builders face excess inventory, pushing resale prices down, while consumer confidence dwindles ahead of the holidays. Falling wages and job cuts exacerbate economic strain, suggesting a broader normalization to housing fundamentals is needed as spending tightens.