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Feb 9, 2024 | 
ng.investing.com | Barani Krishnan |Antoine Bouvet
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Jul 13, 2023 | 
think.ing.com | Benjamin Schroeder |Padhraic Garvey |Antoine Bouvet
Calmer waters in the week ahead, with some exceptions Tomorrow, the Fed will enter into its blackout period ahead of the July meeting. In US data the highlights are retail sales and industrial production, which can shed more light on the resilience of the economy. At least for industrial data, the ISM manufacturing survey does not bode well. We will also see a slate of housing-related data.
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Jul 12, 2023 | 
think.ing.com | Antoine Bouvet |Benjamin Schroeder |Padhraic Garvey
There was something in the air in the past few trading days. Just when 4% on the 10yr was looking comfortable, there was a pivot of attention towards yesterday's CPI report. Consensus pointed to a low 3% headline number. But we got better. Bang on 3%, so close to a break into a 2% handle. And, the core rate gets back below 5% for the first time in a year and a half. A good look for inflation overall, and correlating with market rates heading decisively lower.
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Jul 11, 2023 | 
think.ing.com | Antoine Bouvet |Padhraic Garvey |Benjamin Schroeder
Central banks aren’t ready to see the glass half full There are plenty of indications that inflation pressure in developed markets is easing… if you’re willing to believe in survey data and leading indicators. Germany’s Zew saw another decline in July although, as a survey of investors’ sentiment, we’re never quite sure if it leads economic data or the other way around.
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Jul 10, 2023 | 
think.ing.com | Antoine Bouvet |Benjamin Schroeder |Padhraic Garvey
There was a pretty noticeable turnaround of the curve-flattening theme last week. Flattening has dominated interest rate markets since it became evident that central banks needed to tighten policy to fight the inflation surge. This is not the first time the curve has re-steepened in this cycle. The last such steepening, in March this year, as investors fretted about the risk of a banking crisis in the US, was caused by a reassessment of the near-term path for policy.
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Jul 6, 2023 | 
think.ing.com | Antoine Bouvet |Benjamin Schroeder |Padhraic Garvey
Data in the week ahead will shine a light on the inflation development in the US with CPI taking centre stage on Wednesday. The consensus is looking for the headline rate to drop to 3%, but given that this is mainly down to known base effects, it will likely be outweighed by core inflation remaining uncomfortably high at 5%. Persistent core inflation also means no let-up in Fed hawkishness.
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Jul 5, 2023 | 
think.ing.com | Padhraic Garvey |Benjamin Schroeder |Antoine Bouvet
Fed minutes sounds suitably hawkish – in tune with the market mood of late Fed minutes are sustaining the hawkish tilt that has been dominating policy discussion of late. The Fed paused in June, but some participants would have preferred a hike. There was acknowledgement of ongoing firm GDP growth and high inflation, with core inflation in particular showing no tendency to show any material fall this year so far.
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Jul 4, 2023 | 
think.ing.com | Padhraic Garvey |Antoine Bouvet |Benjamin Schroeder
The heavy focus currently placed on service inflation from both markets and central banks means today’s PMI services should prove an interesting addition to the economic debate. The only problem is, the reports are second releases and so it is doubtful whether they will provide a lot of new information. Still, the fear of slower but more deeply entrenched price rises in that sector makes qualitative indicators all the more useful.
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Jul 3, 2023 | 
think.ing.com | Padhraic Garvey |Antoine Bouvet |Benjamin Schroeder
Her main point however, if correct, doesn’t necessarily scream curve flattening. In a nutshell, the new central banker pointed to the risk of a higher R* post-Covid, suggesting the assumption that inflation and rates will eventually fall to their pre-pandemic range may be misguided. Two interpretations ensue. In the short term, the comments suggest the BoE will err on the hawkish side rather than rely on mean-reverting models to forecast a fall in inflation.
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Jun 29, 2023 | 
think.ing.com | Padhraic Garvey |Benjamin Schroeder |Antoine Bouvet
US rates on their way to pre-SVB levels As much as inflation is in the spotlight these days, it was the revision to the US first quarter GDP data that elicited the larger reaction from markets yesterday. They were quick to price in a greater chance for a second hike from the Federal Reserve. It had been flagged as a possibility by Fed Chair Jerome Powell only recently in Sintra, but markets were previously reluctant to price it in.
