U.S. 2-year yields are falling to new lows this morning. More traders are betting the Fed will be forced to cut rates below zero. "We do not think this is justified by fundamentals as FOMC members have repeatedly stated that they do not expect to take rates negative:" TD's Misra pic.twitter.com/Q7dJqFOJeq
— Lisa Abramowicz (@lisaabramowicz1) May 8, 2020
Credit standards in the US continue to tighten for L+S firms. Late in the cycle, a flat/negative yield curve causes a constraint on bank lending which tightens credit standards. The C&I Loan Survey leads US capex growth by 2Q targeting a 9% YoY drop by Q4, lowest since Q2 ‘08. pic.twitter.com/ri8D39eSgv
— Julien Bittel, CFA (@BittelJulien) May 8, 2020
The tension on Wall Street is how much longer U.S. stocks can diverge from the cataclysmic collapse in the global economy, posting gains amid the worst economic reports in history. t.co/PddBzVZBz2
— Lisa Abramowicz (@lisaabramowicz1) May 8, 2020
The Services sector kept the economy alive in 2019, when manufacturing was in contraction.
The collapse in services as well as manufacturing complicates the recovery. pic.twitter.com/BGCYNTHuGs
— Daniel Lacalle (@dlacalle_IA) May 8, 2020
Stock Market ‘Not a Reflection of Strength of the Economy,’ NYSE President
In a newly released interview, New York Stock Exchange President Stacey Cunningham acknowledged that the resilient stock market does not reflect the condition of the economy.
The Market Keeps Distancing Itself From the Economy: El Erian
With markets focusing on the improvement in the “second derivative,” that is a reduction in the rate of labor force dislocation, U.S. stocks rose. This widens an already considerable decoupling from the real economy and will fuel the debates on Wall Street versus Main Street, companies versus people and the well-off versus the marginalized.
Mortgage Lenders Tighten Screws on U.S. Credit in Echo of 2008
Mortgage rates are at record lows, but borrowers hoping to take advantage are running into the toughest loan-approval standards in years. Over the past month, lenders have put in place higher credit-score and down payment requirements, and in some cases stopped issuing certain types of…