When JPM quant Marko Kolanovic released his latest report today, we were expecting him to read his latest insight on the positioning of quant funds, on the relative imbalance of risk parity, or perhaps whether market gamma was suggesting that the market is poised for an inflection point, either lower or higher.
This week's preceding 2 and 5 Year auctions, both tailing, were nothing to write home about, or as we characterized them "mediocre." We also said that a big part of the reason may have been the overhang from yesterday's Fed decision. But now that the Fed is out of the picture for 2 months, the real shape of the primary TSY market could show itself and sure enough it did with blistering demand for today's $28 billion in 7 Year paper.
"Did the Fed have an advance glimpse at Q1 GDP?"
That was a question everyone was asking yesterday when the Fed came out with another not too hawkish statement. The answer may have been yes because moments ago the BEA reported that the US economy grew at just a 0.5% annualized rate in the first quarter, missing expectations of a 0.7% growth rate, growing at half the rate recorded in the 4th quarter, and the lowest quarterly growth rate since Q1 2014 (when the winter was blamed for a negative print). It was also the third consecutive quarter of GDP declines.
Authored by former Fed Advisor Danielle DiMartino Booth,
There never was any cake, just crust.
And the French Marie had nothing to do with it. Rather, a Spanish-born queen married to France’s King Louis XIV a century earlier was the ill-mannered Marie who dared to taunt the peasantry. So how then exactly did, “Let them eat cake!” become so universally associated with Marie-Antoinette? In a nutshell: Blackmail.
Since Yellow-Yellen's March dovefest, stocks have rallied, China has stabilized, and while economic data has been weak in general - jobs and inflation (which is what The Fed claims to care about) have been positive. So how does The Fed make June a live meeting, tilt hawkish, and still protect the narrative of recovery and the sanctity of their equity market (which is all that really matters):