Recap 8-23-13


I said a week ago that I thought yields are close to a near term high. It has been a choppy week, but that prediction has not been invalided as of yet. US 10y yields are actually a tad lower vs last Friday’s closing levels.

The sharp drop in New Home sales today is the first important piece of macro data that is showing a response to the rise in yields. In my experience, data usually respond to yields with a roughly 1 quarter lag, so with the rise in yields staring in May and accelerating into June, this suggests that weakness in the data (if any) is likely to hit in the next month or two. All else being equal, this uncertainty may cause the Fed to withdraw accommodation more cautiously.


  • US New Home Sales for July was very weak, falling to 394k vs 487k exp. The June print was also revised sharply. The series is now below end-2012 levels:

  • EU Consumer Confidence rose to -15.6 vs -16.5 exp and -17.4 prev
  • UK 2Q GDP rose 1.5% YoY vs 1.4% exp
  • Canada Core CPI rose to 1.4% YoY vs 1.5% exp and 1.3% prev

Upcoming Data:

  • Mon: US Durable Goods Orders
  • Tue: German IFO, Fed’s Williams speaks, ECB’s Coeure speaks, US Consumer Confidence, ECB’s Asmussen speaks, South Korea Business Survey
  • Wed: BoE’s Carney Speaks, US Pending Home Sales, Australia Private CapEx