The USD moved lower versus all the major currencies with the exception of the CHF.

The USD is weaker declines vs all except the CHF

Fundamentally, the regional manufacturing indices got off to a slow start with the Empire Manufacturing index falling by -11.6 vs 17 expected. Ouch, but it can be a volatile series.

Fed speak had NY Fed Williams saying that we need to get real rates back to zero. He seemed to imply the real rate is the expected inflation rate next year which he expects to be much lower than the near 8% level today. He does agree that 50 basis point hikes over the new couple of meetings makes sense (2x 50 bps = 2.0% target).

Other comments:

  • Mon pol can reduce demand and bring it back into line with supply
  • We need more housing supply to meet demand
  • We have an economy that is out of balance
  • The sectors that are most out-of-balance are those which are rate-sensitive

Hike. Hike. Hike and fix supply by lowering demand. If you can't beat it, destroy it.

Rates moved lower, helping the dollars move lower. Traders are finding it easier to buy bonds if stocks weaken and growth seems to be slowing.

Of interest going forward will be the retail sales report tomorrow. The expectations are for a 1.0% increase after rising 0.5% last month. The core retail sales is expected to rise 0.4% vs 1.1% last month. Be aware.

US rates
US rates moved lower

IN other markets:

  • Spot gold move higher with the falling dollar. The price of gold rose will dollars and $0.62 or 0.70% $1823.30
  • Spot silver rose $0.52 or 2.49% at $21.60
  • WTI crude oil is trading up $3.35 or 3.02% at $113.75
  • The price bitcoin is trading just above $30,000 at 5 PM ET. The price is at $30,001

A concern as far as inflation goes is that food commodities moved higher:

  • Wheat rose the daily limit of 700 to $1247.46
  • Corn rose 28 to 809

India over the weekend put a hold on exports of wheat as drought conditions threaten their food supply.

Meanwhile, at the gas pumps the national average for a gallon of gas is $4.48, which is 40 cents more than a month ago, and $1.43 more than a year ago.

Money is being sucked out of consumers bank accounts without buying anything different than what they bought a year ago. Him