The continued strong demand for consumer services is why the Fed is unable to contain core inflation
According to Apollo, a record 22% of US consumers are planning to vacation in a foreign country. US households want to travel on airplanes, stay at hotels and eat out. The Kobeissi Letter: "That is why inflation in the non-housing service sector continues to be so high. No wonder credit card debt is skyrocketing". Source: The Kobeissi Letter, Apollo
Disinflationary forces are fading right now in Germany
Wholesale prices rose 0.2% MoM in August, after 4 consecutive months of declines. Prices of mineral oil products rose markedly (+6.9%) compared w/July 2023. More headaches for the ECB? Source: Bloomberg, HolgerZ
Japan's 10-year yield surged this morning to 0.70%, its highest level in almost a decade, following weekend comments by Bank of Japan (boj) Governor Kazuo Ueda
Ueda said the central bank’s lifting of its negative interest rate policy will become an option if wages and prices rise, revealing his thinking during an interview with The Yomiuri Shimbun. Ueda said that “there are various options” including lifting the negative interest rate policy once the central bank is confident that Japan has achieved sustainable price increases accompanied by rising wages. The negative interest rate policy is a pillar of the Bank of Japan’s large-scale monetary easing measures. While an easy monetary policy environment will be maintained for the time being, signs of factors could emerge that would allow a decision to be made by the end of the year, he indicated. This is the first time Ueda has given an exclusive interview to any media organization since taking office in April. Source: The Japan News, Tavi Costa, Bloomberg
Over 80% of all US money created (US Dollars printed) took place between 2020 and 2023
Source: Win Smart
Next FOMC rate hike probabilities:
No hike → 93% 25 bps hike → 7% Source: Game of Trades
Usage of the Fed's emergency bank funding facility jumped by $328 million last week
It now stands at a new record high of $108 billion, even as the regional bank crisis is "over." The current rate banks are paying the Fed on these loans is an alarming ~5.5%. i.e . the banks that almost collapsed are now borrowing record levels of expensive debt from the Fed. Is the US regional banks crisis really over? Source: zerohedge, Bloomberg, The Kobeissi Letter
If the Fed cuts rates next year, is that a good thing?
Source: Jeff Weniger
Are FED priorities shifting?
Mentions of inflation in the Fed's Beige book were the fewest since Jan 2022...Meanwhile, mentions of recession jumped to the highest level since at least 2018. The fact that there have been so many mentions of a word which as recently as 2020 and 2021 barely existed in the Beige Book vocabulary could give an indication what the Fed is most worried about today. Source: www.zerohedge.com
