As predictably as Monday follows Sunday, September’s headline PCE — as fresh as an avocado toast forgotten in a hipster café — clocked in at 0.3%. Core PCE inched down, supercore eased, and spending basically flatlined, with Americans buying less stuff but still paying more for the privilege. Incomes rose just enough to pretend everything’s fine, while the savings rate stayed stuck at its annual low. Bottom line: inflation is still too spicy for the Fed, but the real economy looks more like lukewarm soup — hardly the reacceleration story anyone wants to sell heading into the holidays.

In a nutshell, inflation is still too hot, spending is ice cold, and the economy is serving the Fed a very unappetizing lukewarm mess.

Consumer sentiment perked up in December now that the government finally reopened and stopped testing the nation’s patience, but the optimism is about as sturdy as a dollar-store umbrella. Yes, consumers feel slightly better about the labour market, inflation expectations eased a touch, and future expectations brightened—but current conditions actually slipped, most people still expect unemployment to rise, and inflation is viewed as lingering like an unwanted houseguest. In short, the mood has improved, but no one’s breaking out the confetti just yet.

Bottom line: Consumer sentiment got a small December bounce from the government finally reopening, but Americans are still nervously clutching their wallets like the next plot twist is always bad news.

🤵 The Macro Butler Weekly Digest 🤵

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As the world holds its breath for the year's final, riveting FOMC puppet show, the Treasury, in a staggering display of activity, managed to sell another $58 billion in three-year debt. The yield hit an exhilarating 3.614%—its highest since August!—and, in a victory that will surely be memorialized in bronze, it "stopped through" by a massive 0.8 basis points, extending its incomprehensible winning streak to four. Sleep well, financial world.

The overall demand for the $58 billion paper plunged, with the bid-to-cover ratio nose-diving from 3.850, though it miraculously landed 0.009 above the recent average—a true cause for celebration! However, the internal metrics were "more solid," meaning foreign buyers (Indirects) bailed the US out, soaking up a near-record 72.0% of the debt. Because international friends took the lot, the despised Dealers were left with a historically low 9.03%. In other words, the quality of demand was saved by a massive foreign subsidy, ensuring our local financial heroes don't have to carry too much of the debt burden.

In summary, this auction was "surprisingly steady" because a delightful majority of investors are apparently still clinging to the fairy tale that the Treasury bond—the supposed risk-free asset—remains safe, blissfully ignorant that the Educated Yet Idiots now governing the world have rendered nothing on this Earth truly free of risk.

Even while on mission in the city destined to replace NYC as the global financial epicenter, The Macro Butler took time to deliver another price outlook for Gold, Silver, and Copper on Asharq Bloomberg TV.

The world may be shifting East, but the ultimate authority on global commodities remains firmly with The Macro Butler.

The interview has been translated into Arabic.

https://themacrobutler.substack.com/p/interview-with-asharq-bloomberg-tv-0ba

Following the truly thrilling, yet ultimately tailing, 3-Year auction that kicked off our riveting FOMC week, the Treasury has once again graced us by selling another $39 billion in 10-Year paper.

The sale cleared at a breathtaking high yield of 4.175%—a truly monumental rise from November’s 4.068%, officially marking it the highest yield we’ve seen since the dizzying heights of August! And in a stunning display of predictability, the high yield priced precisely on the screws with the When Issued rate.

The demand was unequivocally "solid," with the Bid-to-Cover ratio soaring to 2.550 (up from 2.433) and achieving the dizzying heights of highest demand since September! Clearly, the confidence is contagious.

The internals were even more solid: foreign buyers, bless their hearts, stepped up dramatically, swallowing 70.2% of the debt—another spectacular record since, you guessed it, September. This foreign generosity, coupled with decent domestic institutional demand, meant our heroic Dealers were left holding a mere 8.8%.

In short: the auction was a ringing success because the heavy lifting was outsourced to overseas accounts, saving our domestic underwriters the inconvenience of carrying excessive government risk. Truly a perfectly executed ballet of debt issuance.

Overall, the outcome was once again a "surprisingly good auction," proving conclusively that most investors are still operating under a profound delusion: they simply have not grasped that in a world governed by the utterly predictable idiocy of the 'Educated Yet Idiots,' the supposed 'risk-free asset' is no more free of risk than a politician is free of ambition.

After a two-month data "hiatus," the BLS finally dropped its crucial JOLTS job report, and—surprise! —it was unexpectedly strong! Not for October, mind you, but for the previously unreported September data, which conveniently soared to a whopping 7.658 million openings (the highest since May!). This massive, delayed surge conveniently exceeded every single estimate from those savvy Bloomberg economists. Meanwhile, just to keep things interesting, the layoffs hit a 2023 high, mainly fuelled by the accommodation sector, while hiring politely declined. This whole mess is perfectly consistent with employers adjusting to the glorious higher-cost environment brought to you by insightful US trade policy and that wonderful, lingering economic uncertainty. Truly, a masterpiece of timely government data delivery and contradictory market signals.

In a nutshell, the BLS finally dumped two months of delayed JOLTS data, revealing a sudden, suspicious surge in job openings (driven mostly by healthcare) right alongside the highest layoff rate of 2023.

The esteemed National Bureau of Statistics reports that China's consumer price growth found modest footing in November, rising to 0.7% annually, thereby suggesting a gentle easing of deflationary pressures. However, the foundation remains soft. Though consumer prices gained, the enduring challenge is reflected in producer prices, which recorded their thirty-eighth consecutive month of decline (falling 2.2%). This persistent factory-gate deflation confirms that overcapacity and the lingering housing slump continue to impede the restoration of a robust economic equilibrium.