Daily Chartbook #295

Welcome back to Daily Chartbook: the day’s best charts & insights, curated.

1. Mortgage rate range. "Typical mortgage rates now range some 0.4 percentage point above or below the average rate...That is more than double the range during the years before the Fed started raising rates."

2. Mortgage payments. The median monthly mortgage payment (at 7.31%) is up 10.2% YoY and at an all-time high $2,710.

3. Purchasing power. "A homebuyer on a $3,000 monthly budget has lost nearly $40,000 in purchasing power over the last year, as mortgage rates have risen from around 6.5% in October 2022 to nearly 8% today."

4. Rent prices. "The median U.S. asking rent rose 0.4% year over year to $2,011 in September—the sixth straight month in which rents were little changed from a year earlier."

5. Household deleveraging. "Households have deleveraged their mortgage debt since the last crash."

6. Card spending. "Total spending per HH ex gas increased 2.0% y/y, while retail ex autos was down 0.5% y/y in the week ending Sep 30. Setting aside the end-Sep surge, which we attribute to a payday timing mismatch relative to 2022, y/y spending remains soft."

7. Delinquency rates. "US small banks’ credit card delinquency rates hit a multi-decade high."

8. C&I loan levels. "While the recent decline in C&I loan growth is consistent with past periods around recessions, the absolute level of loans outstanding is stable rather than dropping. That gives some hope that a US recession is not yet a forgone conclusion."

9. Challenger job cuts. US employers announced 47.5k job cuts in September, down from 75.2k in August. Q3 saw a 92% YoY increase in cuts but was down 22% from Q2.

10. Jobless claims. Initial jobless claims ticked up by 2k to 207k (vs. 210k est) while continuing claims fell unexpectedly by 1k to 1.664 million (vs. 1.675 est).

11. Wholesale vs. retail gas prices. "Wholesale gasoline prices imply a 12% decline in retail gasoline prices in coming days & weeks. This will bolster disposable incomes, spending & indicates further disinflation moving through the economy."

12. USD bulls. "Through last Tuesday, speculative traders raised their long bets on the US currency to the highest since June."

13. SPX vs. USD. "Moves in the dollar are useful trading signals, but they are entirely irrelevant to long run US large cap returns."

14. UST issuance. "Treasury auction sizes will increase on average 23% in 2024 across the yield curve...the significant growth in the size of the Treasury market is at risk in 2024 of crowding out demand for other types of fixed income."

15. Real yields. "The increase [in bond yields] has been driven solely by real yields, with breakevens largely stable at just above 2%."

16. Unrealized losses. "The Q3 sell-off in Treasuries could push banks’ unrealized losses back to recent highs."

17. Bear steepening. "Bear steepening happens very rarely. When it does, a recession generally soon follows."

18. UST positioning. "Close to record short positioning in Treasuries."

19. Stocks vs. peak yields. "The silver lining is that the 1 month returns in stocks following local peaks in 10yr yields post a sharp rise is especially strong when equities and bonds are this correlated."

20. Retail investor sentiment. "First increase in optimism in four weeks. Neutral is below avg. for 2nd time in seven weeks. Bearish is at a five-month high."

21. Investor Intelligence sentiment. "Sentiment has turned relatively bearish with the Bull/Bear Ratio down to 1.77 this past week."

22. Active manager exposure. The NAAIM Exposure Index dropped from 43 to 36.2, just above its YTD low of 34.4 in August.

23. HF exposure (I). "US notional long exposure on the Prime book is currently in the ~55th percentile going back to the start of 2018, while US notional short exposure is currently in the ~80th percentile for the same period."

24. HF exposure (II). "Aggregate US long/short ratio now stands at ~1.6, which is in the 12th percentile vs. the past year and approaching multi-year lows in the 2nd percentile going back to the start of 2018."

25. HF short flows. Hedge fund short flows have accelerated over the last couple of months.

26. HFs vs. Financials. EU Financials are in, US Financials are out.

27. Put/call ratio. "Yesterday, the PUT/CALL ratio reached one of the highest levels since the 2020 crash. Forward returns show a clear case for good returns."

28. Speculative groups. "Many of the most speculative groups of stocks are resolving their ranges and hitting lows not seen since 2020."

29. XLE pullbacks. "There have been eight pullbacks since the XLE bottomed in October 2023; with the average return of buying the pullback being 27% within 2-3 months."

30. EPS vs. ISM. And finally, “US ISM vs. EPS growth shows EPS growth should pick up in the next two quarters.”

Thanks for reading!