Inflation and Interest Rates:
The latest inflation data suggests low inflationary pressure for now.
According to the survey, 66 percent believe the Fed pays too much attention to market reactions and 58 percent said it focuses too much on high frequency data, like the monthly jobs report or
latest inflation data.
The latest inflation data from Statistics Canada last week already came in slightly stronger than expected.
The latest inflation data should comfort the central bank: officials have some evidence that the Phillips curve still works, yet they will be feeling no pressure to keep raising interest rates.
Not exact matches
Gold rose even after the
latest data pointed to tame
inflation.
Some of the catalysts ahead of us
later this week, aside from the start of Bank Earnings, includes: ECB's Draghi speaking several times, and Fed's Yellen speaks Friday / Multiple FOMC speakers, and the Beige Book from the Fed /
Inflation from China, Japan, Germany / Germany's ZEW / IP from Japan, EU, US / US Advance Retail Sales / Housing
Data - Housing Starts and Permits / HYG large Coupon Payment date - Could see re-investment bid.
The monthly
data series includes the
latest estimate of core PCE
inflation, which is the Fed's preferred measure of price growth.
Europe's trading calendar this week looks set to be dominated by fresh PMI
data for the core of the Eurozone from IHS / Markit
later in the week as well as U.K.
inflation (Tuesday) and retail sales (Thursday).
Consider that from 2014 to 2016 (the
latest year of available
data), the level of non-residential business investment declined by nearly a fifth (after accounting for
inflation).
The
latest tame reading on
inflation may give the Federal Reserve more wiggle room, if it is deemed necessary, to enact another round of stimulus, especially with recent economic
data on the U.S. economy a bit disconcerting.
Then
late in the week, stocks rallied on some strong earnings reports and economic
data, with a better - than - expected initial reading on first - quarter GDP pushing bond - yield lower on Friday and easing some earlier week concerns about
inflation.
The eurozone, despite growth that has exceeded expectations, has seen disappointing
inflation data of
late.
Given that the headline payroll growth has been solid, the
latest round of US GDP
data (for Q2) surprised to the upside, and personal consumption, real personal consumption and personal income
data also surprised to the upside (July
data), PCE
inflation (fell to 1.4 % Y / Y in July, hitting the lowest since
late 2015) and general wage growth has been the missing piece of the puzzle for the Fed.
«While yesterday's
inflation numbers make a Fed rate rise in March more or less a done deal the prospect of additional rate rises
later on in the year don't appear to be causing the same consternation in equity markets that they were a week ago, as US markets closed higher for the fourth day in succession, despite initially opening lower in the wake of the release of the
data,» said Michael Hewson, chief market analyst at CMC Markets.
A few hours
later he emailed me a chart he'd whipped together, splicing 20 years of Canadian
inflation - adjusted house prices onto his
data for the U.S. housing market going back to 1890.
Euro zone
inflation unexpectedly slowed last month, adding to a string of
data that could make it more difficult for the European Central Bank to curb its lavish monetary stimulus
later this year.
Rent growth is pacing almost a full percentage point behind the overall rate of
inflation, which stands at 2.4 percent as of the
latest data release, and is even further behing the growth in average hourly earnings which have increased by 2.7 percent over the past twelve months.
Relevant and interesting
data: employment, unemployment, employment by gender, employment by nationality and country of birth, average earnings and
inflation... The webpage just shows the
latest figures @statshan on TES and twitter
This
latest report (reflecting January prices) likely represented to many traders and investors the arrival of potentially market - squelching
inflation, which has been nervously anticipated for years but, until now, was almost entirely absent in most economic
data.
If the reason to raise interest rates in July was to get ahead of
inflation, then the
latest data suggest the central bank will have to move faster than it expected.
Insurance companies may like to deal with hospitals and third - party administrators (TPAs) more cautiously after going through the
latest data on medical
inflation.