Tag Archive: inflation
EMU August CPI at 9.1%, while the Core Rate Jumps to 4.3%
Overview: The rise in global interest rates continues. The US 10-year yield is a few basis points near 3.15% and European benchmarks are mostly 5-6 bp higher. Of note, the sharp sell-off in UK Gilts has being extended. Yesterday’s 10 bp rise has been followed by another 14 bp surge today. Italian bonds are also getting hit. The 10-year yield is up a little more than 10 bp.
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Weekly Market Pulse: The Dog That Didn’t Bark
Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?”
Sherlock Holmes: “To the curious incident of the dog in the night-time.”
Gregory: “The dog did nothing in the night-time.”
Sherlock Holmes: “That was the curious incident.”
From Silver Blaze by Arthur Conan Doyle, 1892
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The Week Ahead: Dollar Bulls Still in Charge
The poor preliminary PMI readings, the ongoing European energy crisis, and the recognized commitment of most major central banks to rein in prices through tighter financial conditions are risking a broad recession. These considerations are weighing on sentiment and shaping the investment climate. Most high-frequency data due in the days ahead will not change this, even if they pose some headline risk.
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Rate Hikes Are Working
New home sales were reported for July as down nearly 13% to 511K, a number that is just about the average since 2010 (543k). But that doesn’t tell the whole story obviously. New home sales have fallen sharply since December of last year, down 39%. The drop from the peak in August 2020 is even more dramatic, down nearly 51%.
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Weekly Market Pulse: Same As It Ever Was
History never repeats itself. Man always does. Mark Twain is credited with a similar saying, that history doesn’t repeat but it rhymes. Of course, there is scant evidence that Clemens said anything of the sort just as Voltaire may or may not have penned the quote above. But both men were much wittier than I – than most – so I’ll take them both as being representative if not genuine.
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Flash PMI, Jackson Hole, and the Price Action
For many, this will be the last week of the summer. However, in an unusual twist of the calendar, the US August employment report will be released on September 2, the end of the following week, rather than after the US Labor Day holiday (September 5).
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The Dollar is on Fire
The dollar is on fire. It is rising against all the major currencies and cutting through key technical levels like a hot knife in butter. The Canadian dollar is the strongest of the majors this week, which often outperforms on the crosses in a strong US dollar environment. It is off 1.5% this week.
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Markets Look for Direction
Overview: The biggest development today in the capital markets is the
jump in benchmark interest rates. The US
10-year yield is up five basis points to 2.86%, which is about 10 bp above
Monday’s low. European yields are up 9-10
bp. The 10-year German Bund yield was
near 0.88% on Monday and is now near 1.07%.
Italy’s premium over German is near 2.18%, the most in nearly three
weeks. Although Asia Pacific equities
rallied, led by Japan’s 1.2%...
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China Disappoints and Surprises with Rate Cut
Overview: Equities were mostly higher in the Asia
Pacific region, though Chinese and Hong Kong markets eased, and South Korea and
India were closed for national holidays. Despite new Chinese exercises off the
coast of Taiwan following another US congressional visit, Taiwan’s Taiex gained
almost 0.85%. Europe’s Stoxx 600 is advancing for the fourth consecutive session,
while US futures are paring the pre-weekend rally. Following disappointing data...
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Is it All Really about Today’s US CPI Print?
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.
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Inflation
(Traveling and unable to provide a technical overview this week.) Rising price pressures,
stronger and more persistent than generally expected, has been the main
challenge for consumers, businesses, and policymakers. It will stay top of mind in the week
ahead as both the world's two largest economies, the US and China, report July
consumer and producer prices. During the Great Depression, the
central governments discovered their balance sheets,...
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The Russian Gold Standard
2022-08-28
by Stephen Flood
2022-08-28
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