Another new low for the Citigroup US surprises index on the back of poor macro numbers this week (ADP employment, ISM services, etc.)
Source: Bloomberg, Ronald-Peter Stoeferle, CMT, CFTe, MSTA
Italians make in real terms less today than they used to in 1990, one really needs to admire how calm they stay about it.
Chart: Michel A.Arouet, @heimbergecon
BREAKING: US consumers' average 5-10 year inflation expectations have spiked to 5.6%, the highest in 31 years.
This measure increased by ~2 percentage points in just a few months. By comparison, median inflation expectations are around 3%, in-line with the readings seen over the last 3 years. Meanwhile, CPI inflation has been above 3% for 38 consecutive months, the longest streak since the 1990s. Will inflation stay a major issue in H2 2024? Source: The Kobeissi letter, Bloomberg
Good to know Mrs Lagarde...
ECB President Christine Lagarde said Tuesday that Taylor Swift’s Eras Tour is not alone in keeping inflation high across the euro zone. “It’s not just Taylor Swift, you know,” Lagarde told CNBC’s Sara Eisen in Sintra, Portugal. “Others have come as well.” Terms such as “Swiftflation” and “Swiftonomics” emerged last year following a surge in spending on services such as hotels, flights and restaurants around her performances.
The price of a Big Mac vs. the US in selected countries
Source: Voronoi
Eurozone core inflation unexpectedly sticky: Headline CPI slows to +2.5% in June from 2.6% in May, in line w/forecasts
However, core inflation unchanged at 2.9% – a notch higher than forecasted. Experts had expected it to cool to 2.8%. Source: HolgerZ, Bloomberg
Q2 Fixed Income Review Chart: US Treasury Yields Resilient Amid Mixed Economic Signals!
As the second quarter of 2024 unfolded, a noticeable normalization of the US economy became evident, marked by a significant downturn in the US Citi Economic Index from 33 to -29, reaching its lowest level in nearly two years. Despite these economic headwinds, the 10-year US Treasury yields closed the quarter slightly higher at 4.30%, a 10-basis point increase. This apparent contradiction between economic normalization and rising yields can be largely attributed to substantial US Treasury issuances, necessary to fund the expansive US fiscal deficit. Furthermore, persistent inflationary pressures have prompted the central bank to delay the anticipated rate cut from July to November 2024, adjusting expectations amid changing economic conditions. As we approach a typically low-liquidity summer period, any shifts in interest rates could be magnified. Additionally, with the US presidential election on the horizon, market sentiments could be further influenced by electoral outcomes. The looming question is: Which will have a greater impact on third-quarter rates—the slowdown in the US economy, the ongoing inflationary and supply pressures, or the unfolding political landscape? #Finance #Economy #TreasuryYields #EconomicIndicators #Inflation #FiscalPolicy #InterestRates #USPresidentialElection #MarketAnalysis Source: Bloomberg
BREAKING: The Fed's preferred measure of inflation (Core PCE) moved down to 2.6% in May, in-line with expectations and the lowest since March 2021.
Core PCE inflation fell to 2.6%, in-line with expectations of 2.6%. So Both headline and Core PCE inflation declined last month. Another welcomed sign by the Fed. Note that "Supercore" PCE rose by 0.1% in May, its smallest monthly increase since August 2023. Health Care (light blue) was the dominant contributor, and 5 of the main sub categories actually declined (if it wasn't for soaring health insurance costs, supercore would be negative). The Fed Funds Rate is now 2.7% above Core PCE, the most restrictive monetary policy we've seen since September 2007. Source: Charlie Bilello
