Stay informed with free updates Simply sign up to the US inflation myFT Digest — delivered directly to your inbox. US stocks closed at a record high after data showed inflation had fallen slightly to 3.4 per cent in April, prompting traders to increase their bets on Federal Reserve’s interest rate cuts this year. The…
Andres Victorero The above is Briefing.com’s weekly economic data table. April ’24 PPI and April ’24 CPI are due out Tuesday, May 14th, and Wednesday, May 15th, respectively. Shelter or OER (owners’ equivalent rent) has a significant influence on the CPI given its weight (roughly 30% of the inflation gauge) and then add in auto…
Daniel Grizelj/DigitalVision via Getty Images The Federal Reserve has as one of its main tools to manage the rate of inflation the Federal Funds Rate. The purpose of this tool is to either entice borrowers to borrow if they make the interest rate low, or to reduce demand for borrowers if they make the cost…
GoodLifeStudio/E+ via Getty Images Nutrien Ltd. (NYSE:NTR) is one of the largest and most diversified farm fertilizer manufactures in the world. The good news for investors is share pricing is back to 2018 levels (when its merger was completed and public trading began, before the pandemic), despite a much-improved balance sheet after years of strong…
Rockaa/E+ via Getty Images By Marc Dummer, Client Portfolio Manager | Mike Reidy, Director, Client Portfolio Manager As inflation proves stickier than anticipated, the role of real assets in a diversified portfolio becomes increasingly important for inflation mitigation. Historical data and recent trends underscore that real assets not only shield against inflationary pressures but also…
yalcinsonat1 By James Knightley | Padhraic Garvey, CFA | Chris Turner Fed keeps rates at 5.25-5.50% As universally expected, the Federal Reserve has left the Fed funds target rate range at 5.25-5.50%. The decision was unanimous and was made pretty easy, given inflation continues to run too hot for comfort, consumers are still spending strongly,…
Justin Sullivan They say in thirty years, a burger and fries could cost $16, a vacation $12,400, and a basic car $65,000… No problem. You’ll eat in. You won’t drive. And you won’t go anywhere. TIAA-CREF advertisement (placed in The New Yorker in 1994). Since the Fed began raising interest rates in 2022, traders have…
Adam Gault Thursday’s first-quarter GDP report delivered a one-two punch for markets: slower-than-expected growth and hotter-than-expected inflation. In reaction, stocks fell and US Treasury yields rose. At first glance, the risk-off response looks reasonable. But a closer look at the GDP numbers still leaves room for debate. Let’s start with the offending data that sent…
Colin Anderson Productions pty ltd/DigitalVision via Getty Images By William J. Luther Inflation is once again on the decline, new data from the Bureau of Economic Analysis (BEA) show. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at a continuously compounding annual rate of 3.9 percent…
Eoneren By James Knightley US inflation remains hot, but not as hot as feared So the core PCE deflator has indeed come in at 0.3% month-on-month, with upward revisions to January and February, rather than the 0.48% MoM implied by the quarterly PCE deflator from yesterday, assuming no revisions. In the great scheme of things,…
Darren415 By James Knightley Higher inflation catches the markets’ eye, rather than weaker growth US first quarter GDP growth is an annualised 1.6%, well below the 2.5% consensus expectation, but inflation is hotter with the core PCE deflator up 3.7% annualised versus 3.4% expected. This suggests, assuming no revisions to monthly data, that the core…
PM Images Introduction Inflation has become an issue again. In the United States, all-item inflation has come in higher than expected for four consecutive months, with new upside momentum reported in March. Expectations are the Fed’s favorite indicator – the PCE price index – will show its third-consecutive increase in March as well. Bloomberg Zooming…
JLGutierrez By Alexander William Salter Despite extraordinary monetary tightening by the Federal Reserve, inflation remains elevated above its 2 percent target. Even more worrying, inflation accelerated during the first quarter. The Consumer Price Index (CPI) rose at an annualized rate of 4.5 percent over the last three months. The figures for Personal Consumption Expenditures Price…
Marc Dufresne The recently released Federal Budget is looking to boost revenue through new taxes. But it also includes more than $50B in new spending over the next five years. Hafiz Noordin, VP & Director, Active Fixed Income Portfolio Management at TD Asset Management, looks at the implications for the Bank of Canada’s efforts to…
Richard Drury Inflation Remains High, but Is Improving in More Economies Historical analysis does not guarantee future results. OECD: Organisation for Economic Co-operation and Development Major economies’ core inflation based on local Consumer Price Index As of March 27, 2024 (Source: Haver Analytics, OECD and AllianceBernstein (AB)) Inflation, one of many inputs to multi-asset decision-making,…
Emir Hoyman/iStock via Getty Images Fundamentals Persistent inflation pressures persisted in March, throwing a wrench in the Federal Reserve’s plans to start lowering interest rates in June and sparking doubts about whether they can do so this year without signs of the economy slowing down. According to the Labor Department’s report on Wednesday, the Consumer…
HAYKIRDI/iStock via Getty Images In my most recent article, I outlined four scenarios for US inflation assuming that there is no war or other event that disrupts global oil supplies. In this article, I will outline various “oil-shock” scenarios and their expected impacts on US inflation. This subject is obviously very relevant right now, considering…
The SHRINKING Dollar YinYang “The road to Easy Street goes through the sewer.” – John Madden Interest rate concerns were already in focus as the equity markets digested what Powell and other Fed officials were saying—that they were walking back the dovish 3-cut outlook that was initially a 6-cut one. With the latest hot inflation…
Jonathan Kitchen By Nikhil Mohan, Economist, Franklin Fixed Income On a monthly basis, US headline and core Consumer Price Index (CPI) topped expectations-both rising 0.4%. The core measure has now risen at that pace for three successive months. While the pace of increase remained unchanged at 0.5% for core services (which is still more than…
Dilok Klaisataporn AGNC Investment Corp. (NASDAQ:AGNC) and other mortgage REITs with considerable investments in rate-sensitive mortgage-backed securities were expected to be the beneficiaries of the Federal Reserve’s rate pivot in FY 2024. With inflation for the month of March coming in hotter than expected on Wednesday, the market is adjusting its expectations for cuts to…
Afry Harvy U.S. stock markets ended the year strong after the Fed held interest rates steady, prompting revised expectations and signaling lower interest rates in 2024. Domestic stock markets changed little during the recent period between Index selection dates (December 14, 2023, to January 10, 2024, the “Period”). U.S. domestic markets ended 2023 on a…
Eoneren By James Knightley, Chief International Economist US inflation remains too hot for comfort US core consumer price inflation came in at 0.4% month-on-month, above the 0.3% consensus – only one forecaster predicted such an outcome, so just like last Friday’s jobs report, this is another significant upside surprise that should quash expectations of a…
TERADAT SANTIVIVUT The US data calendar has been light to start the week. Today, the only release of note was the NFIB’s reading on small business sentiment. While the index was expected to tick up to 89.9 from 89.4 in February, it instead dropped to 88.5. That is the weakest reading since December 2012. Given…
Maks_Lab Average prices charged for goods and services rose worldwide at a steeper rate for a second consecutive month in March, according to S&P Global PMI business surveys, hinting at historically elevated stickiness of consumer price inflation at the global level in the coming months. Upward price pressures were primarily linked to increased labour costs…
JLGutierrez By James Knightley The February Job Opening and Labour Turnover Statistics shows that there remains a large number of job vacancies out there, but the low quit rate implies they are not necessarily particularly attractive. Quit rates at current levels imply that labour market cost pressures will continue to cool, which should help to…
Jonathan Kitchen As inflation potentially re-accelerates, investors continue to show increasing demand for innovative financial instruments that an protect against rising price. To that end, it’s worth looking at the Horizon Kinetics Inflation Beneficiaries ETF (NYSEARCA:INFL). INFL is an actively managed Exchange Traded Fund that seeks long-term growth of capital in real terms, i.e., adjusted…
Chip Somodevilla The February PCE inflation report The US Bureau of Labor released the February PCE inflation data. The highlights are: the core PCE inflation increased by 0.3% MoM, as expected, and 2.8% YoY also as expected, down from 2.9% in January – so technically the disinflationary process continues. the headline PCE inflation also increased…
Nuthawut Somsuk And there were big upward revisions of the already hot readings for January. The core PCE price index, the inflation index that the Fed is focused on and refers to all the time, was revised up on Friday for January to an annualized month-to-month growth rate of 5.6% (up from the original 5.1%)…
JLGutierrez By William J. Luther When inflation picked back up in January 2024, many commentators described it as more noise than signal. The latest data from the Bureau of Economic Analysis (BEA) casts doubt on that view. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at…
The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now. As the Argentine economy is racked by record inflation, its people are turning to Bitcoin as…
da-kuk Japan’s private sector picked up growth momentum into the end of the first quarter, according to flash PMI data. This was attributed mainly to faster service sector expansion, though manufacturing output also declined at a slower rate in March. Notably, services new business grew at the quickest pace in nine months, helping to drive…
JLGutierrez By James Smith UK inflation continued to head in the right direction in February and slipped further than expected to 3.4% from 4.0% a month earlier. A lot of this can be explained by food inflation, which is falling rapidly. On a month-on-month basis, producer prices for food have either been flat or slightly…
DKosig We always arrive at work on an Inflation Day with a certain amount of uncertainty hovering over us. When the CPI or the PCE report – the two main indicators of US consumer price trends – comes out at 8:30 a.m. it has the potential to sharply shift market sentiment away from whatever direction…
Dragon Claws Don’t jump to conclusions based on one month’s number. The Final Demand version of the Producer Price Index rose 0.6% in February, and that was twice the amount the market expected to see. A Bloomberg headline on Thursday morning said, “Bond Yields Jump as Hot Inflation Curbs Fed Wagers.” Worse still, the full…
Boy Wirat/iStock via Getty Images Core services CPI – 61% of total CPI and infamous for historic head fakes – is approaching 6% annualized six-month average. The “core services” CPI (services minus energy services) is crucial. The majority of consumer spending goes to core services, and Powell keeps talking about it. Core services include housing…
Torsten Asmus February CPI report The US BLS reported the CPI inflation report for February, and it shows that CPI inflation continues to be elevated and sticky at a level well above the Fed’s 2% target. On an annual basis, the core CPI dropped to 3.8% in February from 3.9% in January due to the…
xefstock Over recent years, I’ve continually traded the extensive bond index ETF, Vanguard Total Bond Market Index Fund (NASDAQ:BND), which primarily owns longer-term US government bonds, with around a third of them exposed to investment-grade corporate bonds. I had a consistently bearish outlook from 2020 through 2023. In January, I published “BND: The 2024 Bond…
Matteo Colombo/DigitalVision via Getty Images Turkey is what amateur international relations aficionados (such as myself) would refer to as a geostrategic location. For over a millennium, back in the age of empire, what is now Turkey has economically benefited from sitting at the nexus of East and West. This significance has not abated in the…
Yauhen Akulich/iStock via Getty Images Introduction On October 22, 2023, I wrote an article titled 2 Champs, 1 Winner: Energy Transfer’s 9% Yield Beats Enterprise Products’ 7% Yield.” Since then, Energy Transfer (NYSE:ET) shares have added roughly 7%, excluding dividends. After tremendous struggles during the pandemic and years with volatile oil and gas prices prior…
tadamichi From geopolitics, uneven inflation and economic uncertainty, there’s much for investors to consider in the current market landscape. Beata Caranci, Chief Economist at TD, addresses some of the key financial questions being asked with MoneyTalk’s Kim Parlee. Kim Parlee: Every quarter, TD Economics gets barraged with questions about what is happening with the economy….
Dragon Claws I perceived a remarkable investment opportunity when long-term yields surpassed 4.5%. I warned last month of a potential significant repricing of bonds as a result of unreasonable rate cuts that had already been priced in. Currently, favorable yields are present, but macro conditions have deteriorated for purchasing due to the following potential threats:…
Wong Yu Liang/Moment via Getty Images By Seema Shah, Chief Global Strategist The January Consumer Price Index (CPI) showed that inflation was, once again, hotter than expected, frustrating both the market and the Federal Reserve (Fed). Both headline and core monthly inflation accelerated, while the Fed’s favored supercore inflation measure extended its recent upward trend….
Lemon_tm Gold gives back gains Gold prices fell back to US$2,053/oz, to finish the month 1% lower,1 and departing from historical seasonal strength (Table 1). A retracement following such a stellar finish to the year was probably on the cards, with global gold ETF outflows accelerating to 51t and a reduction in COMEX futures net…
tadamichi The iShares U.S. Treasury Bond ETF (BATS:GOVT) is a pretty high-duration ETF that will be sensitive to the situation of speculated rates across the yield curve, and how the Fed signals its upcoming prevailing rate policies. We are still careful with duration, but are actually more concerned about moderate-duration fixed income compared to long-duration….
DKosig I last covered the SPDR FTSE International Government Inflation-Protected Bond ETF (NYSEARCA:WIP) in early 2022. In that article, I argued that WIP made little sense as an investment, and seemed plainly inferior to funds focusing on U.S. treasury inflation-protected securities, or TIPs. WIP has underperformed relative to these securities and broader bond indexes, broadly…
kutaytanir/E+ via Getty Images The Bank of Canada highlighted stubborn inflation as a key reason it kept interest rates hold, even as the economy showed signs of slowing. Andrew Kelvin, Head of Canadian & Global Rates Strategy with TD Securities, discusses the outlook for rates going forward with MoneyTalk’s Greg Bonnell. Greg Bonnell: The Bank…
Tanankorn Pilong/iStock via Getty Images NEW YORK (January 25) – Fourth Quarter 2023 (2023Q4) Gross Domestic Product [GDP] printed this morning at 3.3%, well above the consensus estimates for the year and quashing expectations of recession that had lingered for much of 2023. (We had predicted 3% (+/-25bps) in our 2023Q3 GDP report, but revised…
Dragon Claws Is inflation finding a bottom? The past 18 months have seen significant development be made on the inflation front. And haven’t risk assets enjoyed it. On a year-over-year basis, no matter which CPI or PCE measure you choose, inflation is down significantly from its peak. However, the fight against inflation is not yet…
Dilok Klaisataporn While most markets seem to have declared victory over inflation, the Quadratic Interest Rate Volatility and Inflation Hedge ETF (NYSEARCA:IVOL) looks to be breaking out to the upside. IVOL acts as an inflation hedge, due to its holdings of inflation-linked bonds, as well as a hedge against yield curve steepening. Both of these…
Author James Smith Developed Markets Economist Stockyme/iStock via Getty Images By James Smith, Developed Markets Economist 2% inflation is coming very soon Financial markets are fully pricing the first Bank of England rate cut in May. While that reflects a global shift in thinking among investors, it also shows mounting confidence that the UK inflation…