Dear Trader,
Three headlines came out this week that all sound fine. Producer prices went flat. Household debt shrank. The Treasury's holding another routine auction.
Read one layer down and they're the same story: the cost of money keeps grinding higher and everybody's pretending they don't notice. Consumers are financing groceries at 21 percent. Uncle Sam is paying the most for 30-year money since 2001. And July's "flat" print only got there because gas got cheaper.
Mark and Voz go live at 10 AM ET to break down all three and what they mean for the tape today.
Stick around to the end. Voz is going to walk through how she trades 0DTE options into the close, the last hour of the day when everybody else is packing up.
This link adds State of the Market to your calendar.
The Daily News Breakdown
SIREN: Producer prices went nowhere in July, and the market decided that was great news. Flat, unchanged, zero.
Except that headline is doing some heavy lifting. Goods fell 0.7 percent almost entirely because energy dropped 3.1 percent and gasoline fell 5.7 percent. Strip out the gas pump and the picture gets less friendly.
Services still rose 0.2 percent, construction jumped 2.2 percent, and portfolio management fees, or what Wall Street charges you, climbed 6.5 percent. Over the past 12 months, unadjusted final demand is up 4.7 percent. That's not flat. That's a treadmill with the incline set high enough to hide it.
SNEAKER: Total household debt actually fell last quarter, which sounds like good news until you see which line went the other way. Credit card balances climbed $21 billion to $1.26 trillion while everything else shrank by $13 billion.
Consumers didn't pay down debt. They swapped cheap debt for the priciest kind available, at an average rate near 21 percent, up from roughly 15 percent in 2021.
More than half of Americans say they're carrying balances just to cover essentials. And the share of card balances more than 90 days late has gone from 7.6 percent in late 2022 to 12.8 percent this year. The headline said debt went down. Read the second line.
SIGN: Uncle Sam is about to borrow for 30 years at the highest rate since 2001, and nobody's fighting for a seat. Treasury sells $25 billion of long bonds this afternoon at a projected 5.24 percent, one day after the 10-year cleared at its highest yield since 2007.
Interest on the public debt already runs $1.17 trillion this fiscal year, up 15 percent. Treasury also swapped one word in its borrowing guidance, from evaluating "increases" to evaluating "changes," which bond desks read as a hint it may shrink long-bond supply and shove more issuance to the front end.
Buyers still aren't rushing in at multi-decade highs. When the government has to pay up for time, that's your sign.