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’The ‘QE-exit’ inflation paradox
RBC Capital Markets takes an interesting take on the Fed’s newly released Fed Funds projections.
First the projections, which look like this:
As the note under the chart declares, each circle represents an individual FOMC member’s judgment of where Fed Fund rates should be at the end of the specified year.
The UK’s inflation myth
Told ya.
From Reuters…
RTRS-UK NOV CPI 0.2 PCT MM, 4.8 PCT YY (FORECAST 4.8 PCT YY)
RTRS-UK NOV RPI 0.2 PCT MM, 5.2 PCT YY (FORECAST 5.1 PCT YY)
RTRS-UK NOV RPIX 0.2 PCT MM, 5.3 PCT YY (FORECAST 5.2 PCT YY)
RTRS-UK NOV CPI ALL GOODS 5.1 PCT YY,
Post-euro economies, charted
Crystal-ball charts via Mark Cliffe of ING (click to enlarge):
We lay emphasis on “crystal ball” given the long time-frame ING has employed, and the intense difficulty in quantifying the damage which complete break-up would cause to cross-border trade and so on.
PMIs kick market when down
German bond auctions failing, IMF non-announcements driving market sentiment, Spain paying through the nose to fund itself, credit spreads blowing out, Dexia dragging down triple-A France, eurobonds getting vetoed again,
On misunderstanding QE and UK inflation
Is QE money printing, or not? That is the question.
Is it hyperinfaltionary, or not? That is another question.
Ever since the strategy was rolled out by central banks in 2009, the vogue has certainly been to describe it as such.
Prepare the printing presses
And so it begins. The softening up exercise for another splurge of QE.
From the Bank of England’s depressing November inflation report.
First, growth (or lack of):
Output appears likely to be broadly flat in the final quarter of 2011.
Citi: EM rate cutters sheathed
If you were expecting widespread easing of policy rates across the emerging world, think again.
Since the end of August three EM central banks have cut rates — Brazil, Israel and Indonesia – but don’t go expecting much more monetary easing,
The trouble with central bankers…
Central banking and central bankers as we know them are out of touch with the modern world and ill-equipped to deal with the challenges set before them.
That is the view of Morgan Stanley’s Manoj Pradhan who argued that the current ‘DDD regime’,
Should the Fed target a nominal level of GDP?
Anything Lord Wolfson can do…
LONDON, Oct 19 (Reuters) – A leading British businessman is offering a 250,000 pound ($390,000) reward for economists who can come up with the best plan for countries to quit the European single currency zone.
UK inflation above 5 per cent…
… in September.
From the ONS:
Consumer Price Indices
• CPI annual inflation stands at 5.2 per cent in September 2011
• RPI annual inflation stands at 5.6 per cent in September 2011
The headlines for the September 2011 consumer price indices are:
Don’t blame us for the Great British Krona
Please, please, please don’t accuse the Bank of England of getting involved in currency wars.
It hasn’t deliberately deflated the Great British Krona Sterling in the past couple of years. In fact, monetary policy has has nothing,
SNB: There is no inflation risk!
You may have stumbled across this Bloomberg story on Wednesday:
Swiss 1970s Inflation Specter Seen in SNB’s Unlimited Sales
Swiss central bank President Philipp Hildebrand’s pledge to protect the economy with unlimited currency purchases may come at a higher cost than billions of francs:
The market for honesty: Gold at $10,000
To those who think inflation is not a problem SocGen’s deep-thinking strategist Dylan Grice has two charts for you:
And what connects the first with the second is the fundamentally dishonest practice of printing money.
Beyond the QE2 adventure
While everything blows up… a blow-out speech by Adam Posen:
Make no mistake, the right thing to do right now is for the Bank of England and the other G7 central banks to engage in further monetary stimulus.
On the difference between virtuous and vicious circles
There’s something to reading Ben Bernanke’s speeches from a passive communication point of view. It’s not so much what he says, but what he doesn’t say. Or rather what he infers by saying something else.
Jedi Kocherlakota on the ways of the FOMC force
As FT Alphaville noted before, the role of the FOMC is about more than just conducting monetary operations. It’s also about moulding investor opinion and expectation.
So, when traditional monetary tools of the Federal Reserve dry up,
The Fed’s oil easing
This post is going to address two fundamental points:
1) Why it might make sense for the Fed (or a respective government agent) to intervene in commodities.
2) Whether the Fed has indirectly already intervened and does this explain the mysterious WTI-Brent disconnect?
While we appreciate the above might be considered controversial,
A sorta meaningless inflation report
It wasn’t easy making heads and tails of Thursday’s surprisingly hot CPI, and like everyone else we soon became distracted by other things.
But we think it’s worth a late look, especially given all the rampant speculation about what the Fed’s next move will be.
Dear Mr Chancellor [updated]
It’s letter writing time again at Threadneedle Street.
In truth there’s not much to see in Tuesday’s inflation report from the Office for National Statistics.
Yes, the CPI number is little bit higher than consensus (4.3 per cent) but the RPI number is bang in line with expectations.
The price of JGB-isation
Japanese history lesson by Citi rates strategist Mark Schofield — probably you can guess the subject:
It is tough to just look at the price action in Japan as the policy process was so long and drawn out.
[Competition] An Australian CPI basket
There’s a lot of talk about the “two-speed economy” in Australia these days, and occasionally one even hears “Dutch disease” mentioned.
Retailers are suffering. Those mining salaries might be impressive,
[Competition] A Swiss CPI basket
Consumer prices are on everybody’s mind in Switzerland.
World Radio Switzerland (the English-speaking Swiss network) kicked things of this morning with a debate about why on earth prices in Switzerland are refusing to budge lower,
Bank of England: “substantial downward risks”
Or to put it another way, the Bank’s fan charts are fanning out so much it’s ridiculous.
Here are two, via the Bank of England’s latest Inflation Report:
First on GDP (getting a bit negative there…):
A gilt-y inflation record
Yields on 10-year gilts fell below 2.77 per cent on Tuesday — the lowest level for about 50 years.
However real yields are also at historic lows, with gilts yielding 2.2 per cent less than inflation.
Do not underestimate rising EM inflation risk
The official Chinese PMI for July came in at 50.7 — another month-on-month decline — although it was not as high as expected. In fact, it suggests we could be seeing signs of a soft landing in China.
Gold’s not as stretched as you might think, Citi says
One for the gold bugs, this.
The possibility of a surge in the price of gold is growing, according to the commodities team at Citigroup.
In fact, they say, the probability of a short-lived spike in gold is now above 25 per cent (up from 5 per cent just a few weeks ago) and that’s even without a worst-case economic scenario actually happening.
China, nothing to see here
The HSBC/Markit flash China PMI for July fell below the 50-mark to 48.9. It was 50.1 in June, making the biggest fall since March 2009 and the first negative result since July 2010.
Whew.
(Cue some more slowdown/stagflation worries.)
The news apparently was a bit of a dampener on markets,
Inflation expectations: frequency and focal points
The importance of inflation expectations to central bank policy is well-understood.
Equally well-known is that there are different, sometimes conflicting measures of these expectations. Surveys of households will show different expectations than surveys of professional economists,
Imagining hypothetical split €-periphery exchange rates
HSBC’s macro currency strategy team has a vision.
A vision of how the euro might have performed had it been split into two currencies back in 2009.
Using the performance of the Swiss franc as an input,
China hikes interest rates by 25bps
So here it is — the fifth Chinese rate hike since October last year.
As Reuters reported on Wednesday:
BEIJING, July 6 (Reuters) – China’s central bank increased interest rates for the third time this year on Wednesday,