Daily update
Daily update
- Today’s Federal Reserve meeting comes a year after Fed Chair Powell’s significant policy errors. It was last June that the Fed trashed forward guidance because inflation expectations were too high, only to have the inflation expectations data revised lower within days. Today’s meeting is widely expected to pause the mindlessly repetitive chant of “hike, hike, hike”.
- The US May consumer price data helps argue against additional rate increases. There is no evidence that prices have to be sticky. Six of the eleven metropolitan areas that reported inflation have a rate below 3.5% y/y. Durable goods prices (the first, transitory inflation wave) remain in deflation.
- US producer price inflation is now due. This is more relevant for corporate pricing power as companies tend to sell to other companies. It is not likely to show much profit-led inflation because profit-led inflation takes place at the end of supply chains and not across the economy at large.
- UK April monthly GDP was positive. This is not a market moving number, but as the media tend to get very animated about the idea of negative GDP it may calm the sensationalism. Eurozone industrial production is due, but is not a market significant event.
