A Capped DXY and Slippage in WTI Help Global Equities to a Three-Day Stretch of Gains
The bond market finds its legs as our survey-based GDP model flags a second quarter of a "1-handle" for real U.S. growth
Key Takeaways
Treasury Shorts Point to a Contrarian Trade: If there is one asset class that is a great contrarian trade right now, it is the Treasury market. Unloved and underowned. The just-released J.P. Morgan client survey shows that fixed-income investors are the most net short since early February. The latest Commitment of Traders report also shows the net speculative short position on the CBOT (futures & options) at over 620,000 contracts. The Nasdaq 100 (on the CME)? Try net longs of over 20,700 contracts for the latest week (March 10th).
Canadian Delinquency Rates Have Soared: We discussed yesterday how the real credit crisis in Canada resides on the debt-heavy household balance sheet. And the default risks have spread to even the creditworthy households, because new data out of Equifax show that over the past year, the mid-tier group has seen its delinquency rates soar by more than +30%. That has outpaced the growth in the lowest tier, where delinquency rates stand at +23% over the past twelve months.
Surveys Point to Slower Q1 Growth: So far this quarter, our survey-based U.S. real GDP model is pointing to just +1.1% annualized growth for Q1. Two quarters in a row of “1-handles” is not a recession, but definitely meets the definition of a growth turndown – and this was happening before the economic fallout we will see from both the Iran war and the problems spreading across the market for private equity and credit.
