Mohamed El-Erian

“As widely expected, the Bank of England hiked interest rates by 25 bps. The vote was 8-1, with one dissenter pushing for 50 bps. The policy move comes alongside a warning that inflation could peak at 4.9% next year. #economy #markets #boe @bankofengland #centralbanks”

“Good morning. The WSJ on a risk that industry insiders I follow worry could spread as more debt refinancing deadlines hit: 'Brookfield is exiting the property rather than refinance the building’s roughly $360 million loan, which would have required tens of millions in additional costs because of today’s high rates, according to people familiar with the matter. The lender, Apollo-owned Bridge Investment Group, is n…”

“I don't know about you, but I find it notable that the yield on 10-year US Treasuries barely moved lower on the day, closing at 4.91%, notwithstanding an 8% drop in oil prices and an intraday turnaround that saw the Nasdaq lose steam and close down 1.1%. #economy #markets #bonds”

“Please find below the usual monthly performance snapshot across major assets and asset classes. October was characterized by significant dispersion, both across asset classes and within them. Of note: • Marked Nasdaq underperformance relative to both the Dow and European equities. • The surge in oil prices. • Dispersion among what many perceive as 'safe havens.' While gold and Bitcoin fell, government bonds rallie…”

“From the WSJ, and further to earlier posts: 'For years, the companies behind America’s artificial-intelligence boom have raised hundreds of billions of dollars with ease. Wall Street eagerly ponied up capital and asked few questions. Now, the balance of power is shifting. Lenders and investors are getting choosier about where to place their bets and are demanding tougher terms, signaling a new phase in the AI buil…”

“Good morning. The attached, from the Bloomberg article 'US-Friendly Nations Slash Treasury Purchases by 60%, Led by Asia,' points to a development that I've been writing about: Historically dependable buyers and holders of US government bonds have been pulling back, driven by both local and global factors. As such, the buyer base has been shifting towards more tactical, short-term investors and traders. #economy #…”

“The Federal Reserve kicks off its two-day meeting today, with markets overwhelmingly expecting tomorrow's announcement to hold rates unchanged. We should expect a relatively hawkish tone in the remarks that follow, given the string of recent inflation data. Dissents on the decision are possible, though that's less clear. #FOMC #FederalReserve #economy #markets #centralbanks”

“Good morning. Alongside this week's crowded calendar of economic data, corporate earnings, and policy announcements, more attention is shifting toward widening dispersion within certain AI segments. #economy #markets #tech #ai #ArtificialIntelligence”

“Luiz Inácio Lula da Silva secures another term as President of Brazil, winning the second round against Flavio Bolsonaro. #Brazil #Lula”

“Markets continued to revisit this past week the previously comforting assumptions around tech ROI and funding needs, triggering NASDAQ market weakness and a flight to quality, even as confidence in the sector’s long-term economic growth effects remains broadly intact. Looking forward, it's an exceptionally busy week of global data, policy meetings, and earnings. For details on these issues and more, please use one…”

“This WSJ headline captures a central duality in China’s economy whose sustainability is increasingly in doubt on both sides: The global economy’s capacity, Europe in particular, to absorb surging Chinese exports, and China's own ability to manage sluggish domestic demand away from state-assisted sectors. #economy #markets #china @WSJ”

“Continuing the French bond market watch: As noted by CNBC (below), the yield on 10-year French government bonds touched 5% for the first time in 24 years. #economy #markets #bonds #yields #france”

“The France–Germany 10-year bond spread climbed back above 150 bps this morning, as French sovereign debt trades unusually like a peripheral issuer rather than a Eurozone core. (Bloomberg chart below.) #economy #bonds #markets #france”

“From the @FT: 'Cracks are appearing in America’s debt-laden $10tn AI infrastructure boom as project delays, public backlash and shaky investor confidence bring a reckoning for the data centre build-out underpinning the US economy.' IMO, what makes all these issues even more interesting is that no matter how they evolve, there are significant economic, financial, social, and geopolitical implications #economy #mark…”

“Global economic activity has navigated higher costs impressively well via a combination of income growth, savings and inventory drawdowns, debt, efficiency gains, slower margin growth, and selective price pass-through. But the longer the inflation hit persists, the greater the risk to growth—as this @FT article on airlines discusses. #growth #inflation #markets”

“Another good US economic number: September industrial production expanded by 0.7%, beating the 0.4% consensus forecast. This comes on the heels of yesterday’s strong retail sales and labor market data. Meanwhile, today’s higher-than-expected rise in September import prices (+1.1%) reinforces the message from this week’s hot CPI and PPI readings. #economy #markets #growth #inflation”

“Of note this early morning: the yield on 10-year US government bonds has fallen sharply, trading just below 5.10%. #economy #markets #bonds #yields”

“From the WSJ article, 'China’s Weakening Economy Is Creating a Lost Generation.' #economy #markets @WSJ #china”

“With diesel back under the spotlight, please find below Google's summary of price movements over the last year. Underlying this is what has become an increasingly influential, multi-directional causal relationship between geopolitics, domestic politics, and economics. For example, as geopolitical tensions drove diesel prices higher, the negative economic impact began affecting domestic politics. That, in turn, inc…”

“Good morning. As reported below by the WSJ, the US budget deficit climbed to nearly $2 trillion ($1.993 trillion) for the fiscal year ending September 30. What remains historically notable is that the US has continued to run a deficit of around 6% of GDP despite solid economic growth and a robust labor market. #economy #markets @WSJ”

“Good morning. From the FT: 'A sharp sell-off in US government bonds is starting to reverberate across corporate America, forcing companies to overhaul their borrowing plans and even raising the spectre of defaults among the most lowly rated businesses.' Remember the historical playbook: The most vulnerable sectors get hit first and hardest. Then, if elevated borrowing costs persist, the pressure both migrates up t…”

“On two stubborn market indicators with broad influence: 1. Brent above $100, even with Strait of Hormuz flows nearly back to pre-war levels. The important comments by Aramco’s CEO provide part of the explanation: massive drawdowns have left both corporate and sovereign inventories 'scarily thin,' and restocking will take significant time. 2. 10-year US Treasury yield at 5.30% despite last week's cooling data and d…”

“The US jobs data is out and there are surprises: Job creation was only 29,000 in September, with the unemployment rate rising to 4.2% and monthly earnings growth moderating to only 0.1%. Add to that downward revisions to both July and August (about 60,000 jobs). On the supply side, a more encouraging development with labor force participation increasing to 61.8%. This will reinforce the impact of recent Fedspeak i…”

“Good morning. It’s a new month for markets, but the dominant theme remains the same for now: upward pressure on government bond yields. The UK 30-year gilt has climbed this morning to a level not seen since 1998, while both the US 10- and 30-year yields trade around those of 2002. #economy #markets #yields #bonds”

“Good morning. In markets, US bond yields are back in focus, with the 10-year hitting 5.22%, its highest level since 2002 -- as Brent oil approaches $110. (CNBC chart below.) #economy #markets #oil #energy #bonds #yields”

“ROW: Long US equities, less so Treasuries: As reported by the FT, 'foreign investors made a record $942bn in net purchases of US equities and investment fund shares in the 12 months to July, accelerating a shift in overseas investment towards American stocks and away from debt. The flows represented the highest rolling 12-month total in Treasury data going back to 1985.' #economy #markets #stocks #bonds @ft”