Good morning. (Today's Smart Brevity: 1,183 words, < 5 minutes.)
Treasury yields jolted higher last week as investors bailed out of safe-haven U.S. government debt, pushing yields up by the most in one week since June 2013. The selloff that began Sept. 4 sent yields on the benchmark 10-year Treasury note from 1.45% to 1.90% in less than 2 weeks.
Be smart: While some have credited the spike in Treasury yields to renewed faith in the U.S. economy, the market is likely more worried about a return of inflation — a far greater ill for fixed income investors as it corrodes the value of already issued bonds.
What's happening: Readings on data that contribute to inflation have consistently surprised on the upside in the past few months, even as U.S. GDP estimates for the third and fourth quarters have trended below 2% and expectations for global growth have been pushed downward.
Further, investors have continued to pour money into money market funds, showing the desire for safe-haven assets has not diminished.
Between the lines: Growing worries about a bond bubble also have spooked bond investors in recent weeks, as money managers, including Guggenheim's Scott Minerd who oversees $240 billion of assets, have sounded the alarm.
The big picture: The latest 2-week trade war truce between the U.S. and China has provided cover for bullish investors to buy stocks, but will make little difference to the current downward trajectory of U.S. and global economic growth. Inflation, on the other hand, appears to be moving higher in a way it has not in some time.
The share of people who chose to leave their jobs, known as the quits rate, rose for the first time in a year, touching its highest since 2001 last month as some 3.6 million workers quit.
The big picture: The high quits rate is an indicator of a strong economy and of potential inflation. If more Americans are voluntarily leaving their jobs, they are likely moving to higher paying opportunities or are confident in finding another job. This signals a likely increase in U.S. GDP but could also portend a pickup in inflation.
Of note: The quits rate rose to 2.6% among private-sector employees, a post 2008 recession high.
The strong U.S. labor market continues to add jobs, but the retail sector has been moving in the opposite direction.
What it means: IIF's economists assert that it takes significantly fewer employees to deliver the same amount of product for e-commerce businesses, meaning they will continue to deliver better profits and push out old-school retailers in large stores.
Details: They highlight a few key trends in the labor market between traditional and online retail...
Brent crude oil futures spiked nearly 20% after a drone attack that hit a Saudi Arabian oil processing facility on Saturday, forcing the kingdom to cut its output in half. Oil prices remained near their high levels on Monday morning.
Where it stands: International benchmark Brent crude futures were still roughly 10% above their late Friday levels, trading around $66.39 this morning, with U.S. West Texas Intermediate crude futures up almost 10%, at $60.11 per barrel.
Yes, but: State oil company Saudi Aramco said it aims to restore about one-third of the lost crude output, or 2 million barrels by Monday.
What they're saying: “While in the short term the direct physical impact on the market might be limited, this should move the market away from its bearish macroeconomic cycle and raise the risk premium in the market as funds reduce their short positions,” Chris Midgley, global head of analytics at S&P Global Platts, says in a note to clients.
UAW members outside GM's plant in Flint, Mich., as workers go on strike early Sept. 16. Photo: Jeff Kowalsky/AFP/Getty Images
Axios' Joann Muller writes: The labor dispute that erupted overnight between General Motors and the United Auto Workers is about more than just the usual issues, as both sides try to score points away from the bargaining table.
Driving the news: About 46,000 hourly workers walked off the job at GM at 11:59 p.m. Sunday, the UAW's first national strike since 2007.
The issues: The union wants higher pay, better benefits and increased job security, arguing it made sacrifices during GM's bankruptcy a decade ago, and now it deserves a share of the company's record profits.
The intrigue: GM is looking to drive a wedge between workers and union leaders while deflecting further attacks from President Trump over job cuts in swing states.
The investigation: UAW leaders appear to be playing hardball, in part to show rank-and-file members they are going to the mat for them amid charges that some union bosses were allegedly pocketing union training funds.
Go deeper: Read the full story here.
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