Tag Archive: inflation expectations

Fading Further and Further Back Toward 2016

Earlier this month, the BEA estimated that Disposable Personal Income in the US was $14.4 trillion (SAAR) for April 2017. If the unemployment rate were truly 4.3% as the BLS says, there is no way DPI would be anywhere near to that low level. It would instead total closer to the pre-crisis baseline which in April would have been $19.0 trillion. Even if we factor retiring Baby Boomers in a realistic manner, say $18 trillion instead, what does the...

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American Expectations, Chinese Prices

The Federal Reserve Bank of New York has for the past almost four years conducted its own assessment of consumer expectations.Though there are several other well-known consumer surveys, FRBNY adding another could be helpful for corroborating them. Unfortunately for the Fed, it has.

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Bi-Weekly Economic Review: Has The Fed Heard Of Amazon?

The economic surprises keep piling up on the negative side of the ledger as the Fed persists in tightening policy or at least pretending that they are. If a rate changes in the wilderness can the market hear it? Outside of the stock market one would be hard pressed to find evidence of the effectiveness of all the Fed’s extraordinary policies of the last decade.

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Bi-Weekly Economic Review: The Return of Economic Ennui

The economic reports released since the last of these updates was generally not all that bad but the reports considered more important were disappointing. And it should be noted that economic reports lately have generally been worse than expected which, if you believe the market to be fairly efficient, is what really matters.

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Bi-Weekly Economic Review

The economic data releases since the last update were generally upbeat but markets are forward looking and the future apparently isn’t to their liking. Of course, it is hard to tell sometimes whether bonds, the dollar and stocks are responding to the real economy or the one people hope Donald Trump can deliver when he isn’t busy contradicting his communications staff.

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Inflation Is Oil, But Inflation Is Much More Than Consumer Prices

The average annual change in the WTI benchmark price was in April about 25%. That was still a sizable increase year-over-year, and just marginally less than March’s average of 33%. For calculated inflation rates, it represents the last of the base effects that have to this point made it appear as if economic improvement was possibly serious.

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Great Graphic: Real Rates in US are Elevated

The US 10-year yield fell briefly below 1.32% last July. The yield slowly rose to reach 1.80% in mid-October. The day after the election, the yield initially slipped to almost 1.71%. This was a bit of a miscue, and the yield rose sharply to hit almost 2.64% the day after the FOMC hiked rates for the second time in the cycle on December 14. The yield backed off to hit 2.33% at the end of last week.

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Great Graphic: CRB Index Revisited

Interest rates and 10-year break-evens are rising. Some think the CRB Index is tracing out a head and shoulders bottom. We look for inflation in non-tradable goods' prices (think services).

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Is the Gold Bull Market Over?

ABN Amro, Natixis and Wells Fargo have issued bearish calls on gold. Natixis even expects three Fed rate hikes next year. Pater Tanebrarum discusses these opinions critically.

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SNB Monetary policy assessment September 2016 and Comments

The SNB inflation forecast showed a strange diversion of conditional inflation forecasts: Draghi expected inflation to rebound to 1.2% next year and 1.6% in 2018. The SNB, however, predicts 2017 inflation at 0.2% and 2018 at 0.6%. For us, one of the two is wrong.

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FX Weekly Review: June 27 – July 01: Swiss Franc Strength Reversed

Week after Brexit.: The Swiss franc (-0.3%) and the yen (-0.5%) were the worst performers, as so-called safe haven buying was reversed. But the Swiss Franc index is still stronger in the last month than the dollar index.

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What Drives Government Bond Yields?

For us the five major drivers of government bond yields are: Inflation expectations and inflation: The by far most important criterion. High inflation expectations must be compensated via higher bond yields. The main driver behind inflation expectations is the wage development, this is the form of inflation that typically persists. Price inflation follows inflation expectations with a certain lag. Wealth: The higher the wealth of a country, the...

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A Little History of Wages, Inflation, Treasuries and the Fed – And What We Learn from it

On this page we show that Inflation expectations and wages drive the behaviour of the Fed and Treasury bond yields. Excessive wage increases lead to recessions, more or less voluntarily caused by central bank tightening Central banks pin down the short end of the yield curve, while financial-market participants price longer-dated yields Some Emerging Markets seem to copy strong wage increases and inflation that we lived in the 1970s Quickly...

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Swiss Franc History: The long-term view and the comparison with gold

We establish a long-term view and history of the Swiss franc. We compare the franc with gold.

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The Cost-Push Inflation Legend



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