Friday, 05 June, 2015

CRT’s Survey results are less bullish than the last month

CRT’s Survey results are less bullish than the last month, but the bias was one of neutrality more than anything actionable. Specifically, when asked what they would do if the market moved higher in price post-NFP, only 13% said they’d buy — least since January. 33% want to sell which is just under the 34% average with the balance, 55%, sitting on their hands vs. the average of 50%. When pressed as to what they would do if the market traded lower, 43% indicated they would do nothing vs. the 40% norm. An above-average 17% were interested in selling vs. 13% norm, while 40% plan to buy, well below the 48% norm. And when asked as to the next move in 5-yr yields 25% said they don’t know — above the 20% average and the highest since November. 37% said yields would slip lower and the average for that is 38%. 38% expected the sell off to continue compared to the 41% average seeing higher yields, the middle of the range. CRT’s special questions were focused on the recent lackluster consumption figures and their implication for the Fed. As for the reasons why consumption has been tame 41% said it was aging baby-boomers building up savings and 37% attributed it to lack of confidence. Somewhat surprising and less inspired for the economic outlook, just 7% indicated that consumers were just waiting in the wings. 15% gave other explains that included a broader shift in consumption patterns for everyone from Millennials to boomers. Several respondents said that it was a combination of increased retirement saving, lack of confidence, and a broader shift. CRT also asked if the drop in consumption had changed Fed expectations and only 35% said it had. The majority are anticipating a September liftoff hike (65%) and 25 by hike/range-increase. 14% said the liftoff would not occur until 2016 and only 8% said in June or July. 12% saw December as the most likely timing for the first hike. When asked how much higher rates would be in 6-months and 12-months the average at 51 by and 100 by — relatively uniformed expectations. Post-Payrolls, And Market Trades HIGHER in price: 13% BUY — worse than the 16% average and the least since January. 33% SELL — under the 35% average. 55% DO NOTHING — more than the 50% six-NFP average. * Post-Payrolls, And Market Trades LOWER in price: 17% SELL — above the 13% average. 40% BUY– under the 48% norm. 43% DOING NOTHING — higher than the 39% average. * Next 15bps in 5-year Rates from 1.616%: 38% say HIGHER — less than the 41% average. 37% say LOWER — the average is 38%. 25% DON’T KNOW — more than the 21% norm. Special Questions: 1) Why do you think consumption has been tame in light of the income story? a. Lack of confidence that it continues. (37%) b. Aging baby-boomers and others building up savings/retirement accounts. (41%) c. There is a wave of buying just waiting in the wings. (7%) d. other…please give us your thoughts. (15%) 2) In assessing Fed policy do you think the consumption story will offset other factors, i.e. the dual mandates, in impacting policy? 35% said it impacted expectations. 3) When do you think the Fed will hike and by how much? June (6%), July (2%), Sep (65%), Oct (2%), Dec (12%), Jan (4%), Mar (10%) 4) Where do you see the target Funds rate/range in 6 months? 12 months? 6-mo = 51 bp and 12-mo = 100 bp on average. Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS). Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this e-mail or any information it contains is prohibited. This information is not, and should not be construed as, a recommendation, solicitation or offer to buy or sell any securities or related financial products. This information does not constitute investment advice, does not constitute a personal recommendation and has been prepared without regard to the individual financial circumstances, needs or objectives of persons who receive it. You are receiving this email because you are a valued client of Archr.