In terms of market moves, adding it all up: metals (risk-off), energy (mostly recessionary), treasury bonds (risk-off), crappy debt (risk on), equities (risk-off), and blessed bitcoin (risk-off) = seems like risk off to me.
Consumer Economy
Personal Income (PI); 25.346T +221.9B, (+0.88% m/m)
2024-Q4 GDP (GDP); 29.720T +344.7B (+1.16% q/q)
Fed GDP Prediction (GDPNOW); -1.48% q/q
Personal Income (for January) moved higher – more than keeping up with inflation. What happens when the income numbers land post-DOGE? I suspect the GDP Now series (an attempt to predict this quarter’s GDP number – updated throughout the quarter) may provide the clue – it changed from projecting expansion (+2.3%) to projecting contraction (-1.48%) just this week. It doesn’t look like much of a drop…but it’s the worst we’ve seen since the pandemic.
h/t Geiger_Capital
Credit & Rates
Fed Balance Sheet (WALCL); 6.766T -16.2B (-0.24% w/w)
Total Bank Credit (TOTBKCR); 18.213T +99.7B (+0.55% w/w)
30 Year Mortgage Rate (MORTGAGE30US); 6.76% -9 bp
10 Year Treasury (DGS10), 4.24% -18 bp
Ishares 20 Plus (TLT); +2.82 (+3.15% w/w)
Q4 2024 FDIC Unrealized Losses; -482.5B (-183.8B q/q)
This week saw a big increase in bank credit: it came in at 28% annualized. Bank credit is starting to go vertical. I don’t know why.
Meanwhile, money is pouring into the long end of the Treasury market. Long rates plunged 14-23 basis points, resulting in a 3.15% gain in TLT this week. The 10-year treasury (4.24%) is now yielding less than the 3-month Treasury (4.30%). That’s a yield curve inversion.
Money appears to be moving in advance of the recession. This doesn’t match up with bank credit.
FDIC just updated their unrealized losses calculation; unrealized losses “grew” by $118 billion in 2024-Q4. With long rates falling over the past few months, the “unrealized losses” will hopefully improve at the next update. Then again – losses from bank loans (vs losses from Treasury buys) might also increase during the upcoming recession.
CME Fedwatch Tool projects a 4% chance of one cut at the March 19th meeting.
by davefairtex 
