Business

October saw exisitng home sales (SAAR) surge to 5.60mm (handily better than the 5.44mm expectation). These are deals essentially done in August and September - weeks before mortgage rates exploded higher - and with median home prices hitting new highs as the cost of funding spikes, it is hard to se how this is sustainable.

What happens next?

The 2013 taper tantrum spike in mortgage rates created a 10% plunge in existing home sales in the following 4 months.

If everything is so awesome, with a growth/inflation miracle just around the corner, then why is the US treasury yield curve collapsing in a dismal-growth-outlook-implying manner?

Followingthe kneejerk spike on the election, 5s30s have crashed to 6 week lows...

Nowhere is this decoupling from reality narrative more obvious than in the banks as NIM is a spread not an absolute...

2Y German bond yields are collapsing, hitting record lows at -72bps this morning as Commerzbank reports a collateral squeeze into year-end. Since the election, the spread between 2Y UST and 2Y GER has exploded by over 50bps, spiking Treasuries to their 'cheapest' to Bunds since 2005...

Bloomberg reports that Commerzbank says in note that the demand for German collateral ahead of year-end continues to rise, reflected in repo funding levels reaching new lows; 3- month GC moves below -70bps, with little on the offer side

While the market has taken the latest round of "optimistic" jawboning by OPEC members in stride, sending crude higher by 4% ahead of next week's OPEC meeting in Vienna where the terms of the OPEC production cut are expected to be finalized, the reality is that a favorable outcome may be problematic.

• Record highs for Wall Street quartet send other stocks higher (Reuters)
• Oil prices rise to highest this month on hopes of OPEC deal (Reuters)
• OPEC Likely to Reach Output Consensus, Delegate Says (WSJ)
• Trump’s Targets in First 100 Days: Trade, Regulation, Corruption (BBG)
• Trump Poised to Push Nafta Changes, Pressure Mexico on Trade (WSJ)
• China Touts Its Own Trade Pact as U.S.-Backed One Withers (WSJ)
• Trump to kill trade deal on day one (Reuters)
• Overtime Pay Rule to Go Into Effect, but May Not Last (WSJ)