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’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,
Cholesterol, eggs, oil and other inflation-fighting ingredients
Here’s a thought after the International Energy Association’s oil price-crushing decision.
The Wall Street Journal reports that the IEA has been working on the plan for months. Suddenly all those recent speeches by Federal Reserve chairman Ben Bernanke on ‘imported’ inflation through high oil prices,
Mervyn Maradona
The Bank of England governor is a rule-breaker, just like Argentinian football star Diego Maradona.
So says Malcolm Barr over at JPMorgan:
One of Mervyn King’s most memorable analogies in explaining the conduct of monetary policy was his reference to Diego Maradona’s two goals against England in the semi final of 1986 World Cup.
Reasons for a UK QE2 trade
To the minutes of the last Bank of England Monetary Policy Committee meeting…
… specifically paragraph 25 where the majority view is discussed:
25 - Most members judged that it was appropriate to maintain the current stance of monetary policy at this meeting.
On Fed tightening, again
Ahead of tomorrow’s FOMC statement and press conference, your (US) inflation graphs du jour:
The graphs show the findings of MIT’s Billion Prices Project (BPP), plotted against the latest CPI numbers through the beginning of June.
A CPI reversal of sorts
For a change, activity in commodity prices has tempered consumer price inflation in the US, at least for a month:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis,
A tale of two UK inflations
Here’s something to throw the Bank of England’s will to withstand high UK inflation (and low interest rates) in surprising, sharp relief.
It’s a new finding by the Institute for Fiscal Studies, connected to a study of inflationary effects on low-income households over the long term:
Googling the British economy
In a world where hedge funds are using Twitter as a trading strategy… It was only a matter of a time before a central bank started using Google seriously for forecasts.
Or as the Bank of England is quite naffly calling it — ‘nowcasts’.
NS&I certificates must be capped
This unlikely to go down well with nervous British savers but Citigroup thinks the government should cap the rates on the recently relaunched National Savings index-linked certificates.
It’s expensive,
Virtual money, from real central bank mistrust
What happens when you cross computer geeks with populist outrage at central banks?
Bitcoins happen.
New Scientist reports in its latest edition that a new virtual currency is harnessing peer-to-peer networking and high-tech computer-run algorithims to rival central-bank issued money.
At least you’re not in Belarus
Country asks for another IMF bailout, after screwing up the first one. There are few signs of spending coming under control. The neighbour which really holds the purse strings demands ever more privatisation.
‘Real’ US Treasury yields go back to zero
The effects of stubborn inflation and persistently low bond yields charted for the benchmark 10-year US Treasury, by Reuters’ financial graphics-guru Scotty Barber:
There’s an even longer chart — plus an explanation — over here.
Goldman warns of significant China slowdown
More on those China slowdown fears, which played a part in Monday’s sell-off.
Goldman Sachs has cut its China GDP estimates for this year and next, citing concerns about weaker US growth, higher oil prices (more on that to follow — but the broker now sees Brent at $130 a barrel in 2012) and of course inflation:
Chart du jour, zen and the art of inflation-targeting
If a 2 per cent inflation target is hardly ever reached, does it still exist? Oommmm:
Related links:
Mervyn crucified - FT Alphaville
Old Lady conspiracy theories – FT Alphaville
Mervyn, crucified [updated]
The biggest year-on-year rise since October 2008…
The second-biggest one-month increase on record…
A record high in core CPI…
A stupid seasonal quirk…
Yep, just your usual UK inflation release in 2011.
The 2001 shift
Kevin Gaynor at Nomura — long-standing side-kick to Bob ‘The Bear’ Janjuah — has had an epiphany.
The crisis didn’t begin in the subprime fuelled mid-naughties.
It began in 2001, when the world experienced a structural shift like none other.
The BoE and the bank funding gulf
There’s a lot to pick over in the Bank of England’s latest inflation report, out on Wednesday. (Full PDF here)
But not so much on inflation. Rather on bank funding relative to interest rates.
Here’s a chart which might well be the signal for tightening Bank Rate for the first time since the crisis.
Chinese commodity imports are falling
It’s probably fair to say that in the commodity world, all eyes are now very firmly set on the state of Chinese imports.
Some interesting signals are now emerging. Namely — and perhaps not surprisingly to some — that Chinese imports are struggling with high global commodity prices.
The deflation risk is still out there, SocGen says
This is what happens when markets are built on sand (silicon QE, anyone?).
They can crumble all too quickly.
A reminder of market fragility, from Societe Generale’s cross-asset research team:
Presumably you need the Baltic Dry line in the first chart — an indicator of ‘real’ economic recovery — to match up with commodities prices,
Emerging loan demand
If you’ve ever wondered what a survey of senior lending officers in 45 emerging markets might look like (as opposed to, say, all those stagnant developed loan market surveys) here’s your chance.
The Institute of International Finance (IIF) has just released first-quarter data from its (enlarged) emerging markets lending conditions survey,
The dollar-battering Bernanke presser
To quote (again) a pint-sized musical firecracker from Minneapolis, this is what it sounds like when doves cry:
At pixel time the US dollar index was at its lowest point in nearly three years against a basket of currencies.
Royal Wedding markets, then and now
And so it begins. The first Royal Wedding investment-related PR research.
It comes from Fidelity Interanational, who say they’ve found some “striking similarities” between the market situation now,
Unfunded entitlements loom again
Ignore, for a second, Standard & Poor’s warning of political impasse on the US budget, or its talk of contingent liabilities like student loans and the financial system. That’s all short- to medium-term.
China’s new, wider, financing measure
Back in February, the People’s Bank of China’s Sheng Songcheng was busy arguing that “society-wide financing” could act as a better guide for monetary policy than new bank loans. Just two months later and the first step towards that process — creating a new financing measure — is here.
The inflationary Easter bunny
Some of the MPC may be exhaling a premature sigh of relief at the widely rumoured inflation *non-fail news* out Tuesday morning.
Analysts have been quick to note that the first below consensus CPI result for 10 months (4 per cent year-on-year vs 4.4 per cent expected) was driven by a fall in food prices (to 4 per cent y-o-y from 5.7 per cent in February),
The banking system – still broken
Here’s a perfectly nuanced view of how quantitative easing — the programme started by the Federal Reserve to avert depression following an almighty banking bubble — impacts asset prices.
First, envision part of the QE process.