Tag Archives: CPI

Overview: The US dollar is trading with a heavier bias ahead of the July CPI report. The intraday momentum indicators are overextended, and this could set the stage for the dollar to recover in North America. Outside of a handful of emerging market currencies, which include the Mexican peso and Hong Kong dollar, most are trading lower. Losses in US equities yesterday and poor news from another chip maker (Micron) weighed on Asia Pacific equities. Europe’s Stoxx 600...

Investors crave certainty. They want to know that there are definitive signals for them to follow as they adjust their investments to fit the current market and economy. They want to know that A leads to B leads to C. Tea leaf readers are always in high demand on Wall Street and they continue to find employment despite their almost universally dismal track record. In this case, it is demand that drives supply rather than the other way around. The constant demand for...

Consumer confidence in Germany never really picked up all that much last year. Conflating CPIs with economic condition, this divergence proved too big of a mystery. When the German GfK, for example, perked up only a tiny bit around September and October 2021, the color of consumer prices clouded judgement and interpretation of what had always been a damning situation. From GfK back then: The growing consumer optimism signals that consumers here consider the German...

Note: This update is longer than usual but I felt a comprehensive review was necessary. The Federal Reserve panicked last week and spooked investors into the worst week for stocks since the onset of COVID in March 2020. The S&P 500 is now firmly in bear market territory but that is a fraction of the pain in stocks and other risky assets. Stocks are now down 10 of the last 11 weeks but the pain was concentrated in the last two weeks. 5 of the last 8 trading days...

While the world fixated on the US CPI, it was other “inflation” data from across the Pacific that is telling the real economic story. Having conflated the former with a red-hot economy, the fact American consumer prices aren’t tied to the actual economic situation has been lost in the shuffle of the FOMC’s hawkishness, with markets obliged to price wrong-way Jay. The short end of the yield curve (USTs and elsewhere) is plotting like FOMC dots, whenever oil and crude...

Markets got aggressive long before the FOMC did. Everything, and I mean everything, has been trending the other way. Jay Powell says inflation risks are most pressing when markets have consistently priced the opposite for a whole lot longer. It’ll be revised history when ultimately the mainstream attempts to write it over the months ahead, many will try to snatch some limited victory from the jaws of defeat. Should recession happen and bring an end to the...

It wasn’t exactly a secret, though the raw data doesn’t ever tell you why something might’ve changed in it. According to the Bureau of Economic Analysis, confirmed by industry sources, US new car sales absolutely tanked in May 2022. At a seasonally-adjusted annual rate of 12.7 million, it was a quarter fewer than sales put down in May 2021 and 13% below the not-great level from the month prior in April 2022. Such puny results have typically been reserved for those...

What changed? For over a month, the Treasury market had the Fed and its rate hiking figured out. Rising recession risks had been confirmed by almost every piece of incoming data, including, importantly, labor data. It is the jobs market where much of the official “inflation” jawboning is centered, all that Phillips Curve stuff. So, whatever might seriously undermine Phillips would put the end to the rate hikes in sight. Short-term Treasuries therefore ignored...

Late in March 2021, then-German Chancellor Angela Merkel announced a reverse. Several weeks before that time, Merkel’s federal government had reached an agreement with the various states to begin opening the country back up, easing more modest restrictions to move daily life closer to normal. But with case counts sharply rising once more, the whole thing was going to get shutdown instead. The government declared a holiday starting April 1 (no fooling) last year,...

For once, I find myself in agreement with a mainstream article published over at Bloomberg. Notable Fed supporters without fail, this one maybe represents a change in tone. Perhaps the cheerleaders are feeling the heat and are seeking Jay Powell’s exit for him? Whatever the case, there’s truth to what’s written if only because interest rates haven’t been rising based on rising inflation/growth expectations. Quite the contrary, actually. It’s all FOMC and the...