More Growth from Manufacturing and Housing Sectors, Debt-to-GDP Ratio Hits New Record, and Effects of Climbing Interest Rates
April 19, 2021 | FIRESIDE CHARTS
Manufacturing growth has accelerated in both New York and Philadelphia in yet another sign of strength from the sector. The housing sector also remains strong and saw residential construction activity surge last month after slowing in February as homeownership sees its largest annual growth in over 15 years. Meanwhile, the economic recovery thus far has been impressive, but the federal debt taken on to fund that recovery is still a significant concern. Our debt-to-GDP ratio is at a record high and financing that debt will only get more expensive as the yield curve “normalizes” and interest rates continue their climb from historical lows. Interest rates also appear to have been driving movement in the USD this last year, so we’ll be keeping an eye on how that relationship evolves. And has the crypto craze contributed to the recent weakness from gold as other major commodities benefit from reflation?
1. The NY Fed’s Manufacturing Index continues on its roll:
Source: The Daily Shot, from 4/19/21
2. It is not quite the Eagles-Giants rivalry, but the Philly Fed report was even stronger:
Source: The Daily Shot, from 4/19/21
3. Just in the last year, about 4% of American households stopped renting and bought their own home:
Source: The Daily Shot, from 4/19/21
4. Covid-driven housing demand continues to surge, reducing the housing deficit caused by low levels of new housing of the previous decade:
Source: The Daily Shot, from 4/19/21
5. It took 70 years, but we now have more debt as a percent of our GDP than ever before, and the last peak was to finance WW II…
Source: The Chart Store, from 4/19/21
6. Here are our annual deficits:
Source: The Chart Store, from 4/19/21
7. Due to the historically low interest rate levels of last year, the federal government’s interest rate payments are still in decline so far in 2021. Yet rate and yield curve “normalization” will reverse this trend shortly:
Source: The Daily Shot, from 4/19/21
8. Since the beginning of the pandemic, it looks like the main driver of the USD has been interest rates:
Source: The Chart Store, from 4/19/21
9. The reflation trade has been strong with the exception of gold. Is gold’s “crypto-nite” simply demand being siphoned away by cryptocurrencies?
Source: The Chart Store, from 4/19/21
10.When you get your shot, prepare accordingly…
Source: The Daily Shot, from 1/28/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.