With most of the major markets trading flat today, many companies are now going bankrupt in this key sector of the economy.

Japan Continues To Battle
January 23 (
King World News
) –
Peter Boockvar:  The BoJ made no policy change overnight as expected but Governor Ueda still seems to be laying the groundwork for an end to NIRP and YCC. He again highlighted the importance of seeing quicker wage gains and some major union negotiations are currently taking place which Ueda talked about.

“Prospects of higher wages are gradually affecting sales prices, which is leading to a gradual increase in service prices…If we get further evidence that a positive wage inflation cycle will heighten, we will examine the feasibility of continuing with the various steps we are taking under our massive stimulus program” said Ueda. Sounds like a guy ready to tighten again. Also, “The likelihood of realizing this outlook has continued to gradually rise.” And finally of note, “Based on our current economic forecast, even if we were to end negative rates, monetary conditions will likely remain very accommodative.”

So maybe there is a change at their next meeting in March or in April if not. The 10 yr JGB yield rose by almost 2 bps in response to close at its highest level since December 18th, though still well below the early November level.

In turn, yields are higher in Europe and the US today. 

Japan’s Debased Yen
The yen initially sold off upon the no policy change announcement but after people digested the statement and Ueda made comments in his presser, it’s now up slightly but off its morning highs. 

US Economy Continues To Struggle
As we all discuss and debate the state of the US economy ahead of the Thursday Q4 GDP report, I’m going to list here the one liners from the Beige Book seen last week which doesn’t sound anything like a 2% growth environment. 


“Economic activity was down slightly.”


Regional economic activity declined slightly.”


“Business activity held steady during the current Beige Book period – after falling for most of 2023.”


“District business activity edged up.”


“The regional economy grew mildly in recent weeks as consumer spending was flat to increasing modestly.”


“Economic activity grew at a slow pace.”


“Economic activity in the 7th District was up modestly.”

St. Louis:

“Economic activity has remained unchanged since our previous report.”


“District economic activity was down slightly.”


“Economic activity in the 10th District declined moderately.”


“Economic activity expanded at a modest pace over the reporting period, with most sectors holding steady or experiencing slight growth.”


“Economic activity was stable overall.”

Many Trucking Companies Going Out Of Business
We know that tighter monetary policy and higher interest rates is meant to cool the demand side of the economy. What it also does is reduce the supply side too in terms of capacity. Many trucking companies are going out of business in part due to the manufacturing recession and shift in consumer spending to services but also the small operators who jumped into the business when the spending on goods was raging are also leaving. The result is a slow but steady increase in trucking prices, as we see what is going on with container shipping costs. The Dry Van Rate per Mile closed yesterday at the highest rate since February 2023.

It is well below the early 2022 peak for sure but if we want to analyze inflation on a rate of change basis, I’ll argue that goods prices have the real potential to tick higher again. I’m waiting to see air cargo prices get updated and haven’t since January 10th in what I look at. 

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