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  • 10 Facts about the US Treasury Market

    Torsten Sløk

    Apollo Chief Economist

    Our chart book, available here, monitors a broad spectrum of indicators for signs of weakness in demand for US Treasuries. Fed cuts will begin to test the appetite for Treasuries among yield-sensitive buyers such as households, pension funds, and insurance companies.

    10 Facts about the US Treasury market
    Source: Apollo Chief Economist

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    See important disclaimers at the bottom of the page.


  • Sources of NOK Depreciation

    Torsten Sløk

    Apollo Chief Economist

    The depreciation of the Norwegian krone has been driven by the Fed raising interest rates faster than Norges Bank and by weak oil prices, see charts below and our chart book available here.

    Norwegian krone: Real exchange rate depreciation
    Source: Bloomberg, Apollo Chief Economist
    The Fed raised interest rates faster than Norges Bank
    Source: Bloomberg, Apollo Chief Economist
    Weaker oil prices have also been contributing to NOK weakness
    Source: Bloomberg, Apollo Chief Economist

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  • Average Lottery Spending, by State

    Torsten Sløk

    Apollo Chief Economist

    The five states with the highest average annual lottery spending per person are Rhode Island, Massachusetts, Maryland, West Virginia, and Delaware, see chart below.

    States with highest annual average lottery spending
    Source: North American Association of State & Provincial Lotteries (NASPL), US Census Bureau, Apollo Chief Economist

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  • Record Low Levels of Layoffs

    Torsten Sløk

    Apollo Chief Economist

    The JOLTS data shows that layoffs are currently at record-low levels, see the first chart.

    The Challenger, Gray & Christmas survey of job cut announcements shows that job cuts are at record-low levels, see the second chart.

    WARN notices are trending down, suggesting that initial jobless claims will decline over the coming months, see the third chart.

    The bottom line is that the rise in the unemployment rate is not driven by people getting fired.

    Put differently, we are not in a recession, and it is debatable if the labor market is softening.

    In short, the economy is doing just fine, and that is good for consumer spending, capex spending, and corporate earnings. There is no need for the Fed to cut interest rates four times this year. In fact, cutting interest rates too aggressively runs the risk of triggering another run-up in inflation.

    Our latest chart book with daily and weekly indicators for the US economy is available here.

    Record low levels of layoffs
    Source: BLS, Haver Analytics, Apollo Chief Economist
    Announced job cuts trending lower
    Source: Challenger, Gray & Christmas, Haver Analytics, Apollo Chief Economist
    WARN data points to lower claims in coming months
    Note: The Worker Adjustment and Retraining Notification (WARN) Act helps ensure 60 to 90 days advance notice in cases of qualified plant closings and mass layoffs. WARN factor is the Cleveland Fed estimate for WARN notices (https://www.clevelandfed.org/publications/working-paper/wp-2003r-advance-layoff-notices-and-aggregate-job-loss). Source: Department of Labor, Haver Analytics, Federal Reserve Bank of Cleveland, Apollo Chief Economist

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  • During the pandemic, many new businesses were created, see the first chart below. But the new businesses created were different. They were created by individuals rather than corporations, and they were smaller and less likely to hire a lot of people, see the second and third chart.

    The bottom line is that business dynamics changed during Covid, with more one-person businesses opening since 2020. This is likely why the BLS overestimated employment in the birth/death model, which looks back five years and adjusts the total employment numbers for how many new businesses have opened and how many people work at these new businesses.

    In other words, new businesses created are smaller and have fewer workers. The sector distribution seems to be fairly even and a lot of these businesses happen to be in Florida, see the fourth and fifth chart.

    The implication for markets is that employment growth going forward will be lower because of an increase in the share of new businesses with fewer workers.

    For more, see our chart book available here on these changing business dynamics.

    Business applications increased during the pandemic and have stayed elevated
    Source: Census Bureau, Haver Analytics, Apollo Chief Economist
    Business applications from corporations did not increase during Covid
    Source: Census Bureau, Haver Analytics, Apollo Chief Economist
    The share of business applications that convert into a business with many employees has declined
    Note: High-propensity businesses are those that have a higher likelihood of becoming businesses with employees and payroll capabilities, and include those that: Define themselves as a corporate entity, indicate a plan to hire employees, have a date for providing first wages and planned wages, have been given a NAICS industry code that aligns with accommodation and food services, construction, manufacturing, retail, professional, scientific or technical services, educational services and healthcare.
    Source: Census Bureau, Haver Analytics, Apollo Chief Economist
    Business applications have increased across sectors
    Source: Census Bureau, Haver Analytics, Apollo Chief Economist
    There are a lot of entrepreneurs in Florida
    Source: Census Bureau, Apollo Chief Economist. Note: Data for 2022.

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  • The share of Italian government bonds held by non-residents has increased over the past year, see chart below.

    More foreigners are buying Italian government debt
    Source: Bank of Italy, Apollo Chief Economist. Note: Monetary Financial Institutions include banks, money market funds and ECB.

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  • During the pandemic, households increased spending on goods because they were shopping online, and services spending was lowered because they couldn’t go to restaurants and travel.

    The chart below shows that consumers have significantly increased spending on services over the past two years, and the current share at 68% is now close to pre-pandemic levels.

    The bottom line is that we are getting to the end of the catch-up effect for companies in the consumer services industry.

    Source: BEA, Haver Analytics, Apollo Chief Economist

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  • Negative Population Growth in China

    Torsten Sløk

    Apollo Chief Economist

    Population growth in China has now turned negative. This is important because a growing labor force used to be a strong driver of growth in China. Combined with falling home prices and ongoing trade wars with Europe and the US, the headwinds to growth in China are intensifying. One implication for markets is continued downward pressure on commodity prices.

    China’s population growth has turned negative
    Source: CNBS, Haver Analytics, Apollo Chief Economist. Note: Natural population growth shown. Natural population growth = (birth rate – death rate) * total population.

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  • Small Business Optimism Rising

    Torsten Sløk

    Apollo Chief Economist

    Small business optimism is at the same level as when the Fed started raising interest rates in March 2022, see chart below. This is not a recession. If anything, this suggests the economy is reaccelerating.

    Small business optimism back at March 2022 levels when the Fed started raising rates
    Source: NFIB, Haver Analytics, Apollo Chief Economist

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  • The Financial System Is Changing

    Torsten Sløk

    Apollo Chief Economist

    The financial system is changing.

    First, banks are changing, and debanking continues, partly because of banks’ maturity mismatch when using deposits to finance long-term lending and partly because of ongoing changes to market liquidity and market making.

    Second, how firms and consumers borrow is changing, with private credit playing a bigger role, and an increased realization that long-term assets such as investments in AI and energy should be matched with long-term liabilities.

    Third, how households save for retirement is changing with passive investing growing, democratization of alternatives, and an increased recognition that parts of the 60/40 portfolio invested in highly liquid public markets can be replaced with private fixed income and private equity both for households and institutional investors.

    The financial system is changing

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