Good morning. Here are 3 charts that are driving the chatter around finance, investing, and economics today.
Le Spread is certainly the best name for a government bond spread, and it is telling quite the story since the first round of presidential elections in France on Sunday.
The difference between these French and German long-dated bonds hit a year-to-date low today. Investors (and gamblers) like Emmanuel Macron’s chances against FN leader Marine Le Pen. A win by Macron would make French debt more attractive, as the En Marche! leader takes a decidedly pro-EU stance and adds stability to the always-evolving European project.
Trump’s Economy: The 2/10 spread
Speaking of government debt spreads, the difference between the 2-year and 10-year bond yields in the United States is also painting a colorful picture.
We looked at the 2/10 spread back in February, and found that investors were starting to become skittish after the initial burst of enthusiasm following Donald Trump’s election. The market’s confidence in Trump as continued to erode, and the spread – which peaked at 1.35% on December 22nd – has since fallen, and even fell below the pre-election level of 1.01% on April 18th.
What does this mean? Policy uncertainty around health care and taxes, and sway (or more damaging, the lack thereof) that the Trump administration has on the Hill is weighing on investors. The yield curve is flattening, meaning investors are becoming less optimistic in the short-term, and are shifting into safe-haven assets, like the 10-year treasury.
The Wall Street Journal ran an above-the-fold chart on the decline of the retail industry over the weekend (WSJ link here) . Both high-end and low-end stores are closing at a faster rate than even during the financial crisis. Ecommerce sites like Amazon are certainly growing and forcing retailers to adapt or die.
Retail jobs, however, tell a different story. Yes, the number of people working in retail has fallen since the start of the year. But more than 1.5 million retail jobs have been created since the nadir of the financial crisis. The current level is even above the pre-crisis level.
It is a fact that plenty of electronics stores and teen retailers that are closing their bricks-and-mortar stores. But, the employees are generally just shifting into other types of retail jobs. That’s the beauty of the retail industry – the skills needed are translatable, whether you work at Aeropostale, Home Depot, or your local dive bar.
Markets shift assets to their highest and best use, and that seems to be what we are seeing in the retail industry.
Cover photo: European Peoples Party, Flickr Commons