Is it time to increase duration in EUR bonds?
The latest European Commission survey on Eurozone selling price expectations shows a significant decline, suggesting that inflation should continue to decrease in the coming months, alleviating pressure on the ECB to tighten its monetary policy. After a possible one or two final tightening moves by the ECB in June and/or July, is it worth considering a higher allocation to European rates, particularly core bonds? Source : Bloomberg.
Lumber futures are at their lowest levels since May 2020, down 81% from the peak in May 2021
Source: Charlie Bilello
US MAY EMPIRE STATE FACTORY INDEX FALLS TO -31.8 (lowest since Jan.2023), EST. -3.9
The orders index also slid by the most since April 2020, hitting the lowest level since the start of the year. The shipments gauge plummeted more than 40 points. Source: Bloomberg
The U.S. government's interest expense is now an annualized $928.9 billion
Source: Jeff Weniger
China Inflation Weakens to 2-Year Low on Uneven Recovery
China’s consumer inflation slowed to the weakest pace in two years in April while producer prices fell further into deflation, fueling debate about whether more policy stimulus is needed. The consumer price index rose 0.1% last month from a year earlier, the National Bureau of Statistics said Thursday, reflecting muted domestic demand as well as base effects from last April’s Shanghai lockdown. Core CPI, which excludes volatile food and energy costs, was unchanged at 0.7%. Producer prices fell 3.6% in April as commodity costs softened. The figure was more than March’s drop and deeper than economists had expected. Source: Bloomberg
US inflation continues to cool down
US April CPI inflation +4.9% year/year vs. +5% estiated & +5% in prior month … Core CPI +5.5% year/year vs. +5.5% est. & +5.6% prior
Has the Fed ended the flattening of the US Treasury yield curve?
Yesterday, the Fed hinted that this could be the last rate hike of this cycle, leading some to wonder if the flattening of the US Treasury yield curve is finally over. After the FOMC meeting, the difference between 10-year and 5-year Treasury yields turned positive. It should be noted that this part of the curve was the first to turn negative in March 2022. Will this new trend continue in the weeks and months to come? Source: Bloomberg
ECB: A 25 Basis Point Hike Carved in Stone?
The next ECB meeting is coming up on Thursday and this morning two crucial data points were released. Eurozone core inflation saw a slight decrease in April from 5.7% to 5.6%, marking the first decline in 10 months. This is a positive sign that core inflation is heading in the right direction. Meanwhile, the ECB's bank lending survey indicated that credit standards "tightened considerably" in Q1. This shows that the ECB's monetary policy, which includes rate hikes and quantitative tightening, is starting to have an impact on the system. Source: Bloomberg
