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The data is hawkish and bonds are getting smoked for a reason!

Since the beginning of the year we have been very constant with our criticism of the man we refer to as “He Who Sees No Bubbles”  - Ben Bernanke. Not only is it his mandate to control “inflation”, he is also responsible for controlling “growth” too.  Today’s ISM data shows he is failing on both counts. But then again, has the Fed ever been accurate with their forecasts for inflation? They’ve only changed the CPI calculation nine times since 1996 – but who’s counting?

We are. 

Below, we have attached the latest readings on from the ISM: the Manufacturing Index and Prices Paid.

  • ISM Manufacturing for March just made another higher-high at 59.6 (versus 56.5 in February).
  • Prices Paid continue to ramp, coming in at 75.0 in March (versus 67 in February).


On the ISM Manufacturing reading - manufacturing expanded in March at the fastest pace since July 2004.

The Prices Paid survey is still below the 2008 highs, but those readings also carried $152/barrel oil prices!

Yields across the Treasury curve continue to breakout to the upside, as we are short High Yield and Municipal bonds.  The US Dollar has been lower for the past two days but is still in a bullish formation and we believe it will continue to make higher-highs throughout the intermediate term. As usual, the equity market gets the memo last and will be the last to see an impending rate hike priced in. As such, we’ve just shorted the S&P via the SPY this morning and will continue to manage risk around the position.

Howard Penney

Managing Director