U.S. Peak Inflation Hopes After July CPI Flat 0.0% m/m Down from+1.3% in June

US consumer inflation hit +8.5% y/y vs +8.7% expected. Core CPI fell to 5.9% y/y vs 6.1% expected and 5.9% prior. CPI in July stalled m/m 0.0% m/m vs +0.2% expected and +1.3% prior. Core CPI rose +0.3% m/m vs +0.5% expected and +0.7% prior. With the pullback in oil prices CPI energy -4.6% vs +7.5% prior with Gasoline -7.7% vs +11.2% prior. Despite the noise inflation is uncomfortably high, an example owners’ equivalent rent portion of CPI +5.8% y/y, … Continue reading “U.S. Peak Inflation Hopes After July CPI Flat 0.0% m/m Down from+1.3% in June”

US Consumer Inflation Expectations for Year Ahead Fall to Lowest in Five Months in July

US consumer inflation expectations for the year ahead fell to 6.2% in July of 2022 the Federal Reserve Bank of New York said Monday. This was the lowest reading in five months and down from a record high of 6.8% in June. The bank’s July 2022 Survey of Consumer Expectations shows substantial declines in short-, medium- and longer-term inflation expectations. Expectations fell sharply for gas (-4.2 percentage points to 1.5%, the second largest drop ever) and food price changes (-2.5 … Continue reading “US Consumer Inflation Expectations for Year Ahead Fall to Lowest in Five Months in July”

Sea Freight Rates Continue to Slide, BDI at Six Month Low as China Woes Mount

The Baltic Exchange’s dry bulk sea freight index booked its worst week in over two months, taking it to a six-month low on Friday. Rates across component vessel segments were down hard. China’s woes deepen with the Chinese ailing property sector, COVID-19 curbs, steel production cuts and tensions over Taiwan, which were heighten by US speaker’s visit there and China sending missiles into Japanese waters. The BDI index saw a weekly loss of nearly 18%. The BDI factors in rates … Continue reading “Sea Freight Rates Continue to Slide, BDI at Six Month Low as China Woes Mount”

US Payrolls Add Robust 528k in July with 471k in New Private Jobs

US July nonfarm payrolls rose by 528,000 (consensus 250,000) with June’s a revised 372K new jobs. June unemployment rate was 3.5% (consensus 3.6%), versus 3.6% in June and slightly above before the pandemic became widespread in the U.S. in February 2020. Wages grew 5.2% on the year, down from 5.2% in June. In the face of surging inflation June average hourly earnings rose 0.5% (consensus 0.3%) The change in private payrolls +471K, more than the +230K expected. July 2022 US … Continue reading “US Payrolls Add Robust 528k in July with 471k in New Private Jobs”

Cleveland Fed Mester Says Interest Rates Above Four as Appropriate

Cleveland Fed President Loretta Mester commented on rates and inflation again today as markets brace for the latest US jobs report. “I would pencil in going a bit above four as appropriate,” she said. In the background inflation is heading for negative month to month prints as oil continues to slide after a series of bearish EIA storage numbers. What will the talking heads spin there? On that Mester said need to see several months of monthly changes moving down … Continue reading “Cleveland Fed Mester Says Interest Rates Above Four as Appropriate”

U.S. Trade Deficit -$79.6 Billion, China Gap Rises to -$36.95 Billion

The US trade deficit in June was $79.6 billion (consensus $81.7 billion) from a revised deficit of $84.9 billion (from $85.5 billion) in May. The China and US trade deficit rose to -$36.95 billion vs. May deficit $-31.54 billion. Exports were up 3.5% to a record high of $260.8 billion, led by natural gas. Imports fell again to $340.41 billion vs. May $341.43 billion These monthly swings are also influenced by the supply crisis affecting orders and deliveries. Highlights International trade … Continue reading “U.S. Trade Deficit -$79.6 Billion, China Gap Rises to -$36.95 Billion”

Bank of England Raises Interest Rates Sixth Time to 13-year High 1.75%

The Bank of England MPC at its June meeting Thursday raised the key bank rate by 50 bps from 1.25% to 1.75%, as expected. The vote was 8-1 expected (Tenreyro voted to raise bank rate 25 bps to 1.50%). The BoE will be particularly alert to indications of more persistent inflationary pressures, and will, if necessary, act forcefully in response. Bank says policy is not on a pre-set path Inflation is at the highest rate for a decade, the sharpest … Continue reading “Bank of England Raises Interest Rates Sixth Time to 13-year High 1.75%”

RBA Raises Rates Another 50bps to 1.85% as Expected

The Reserve Bank of Australia raised interest rates for the fourth consecutive time on Tuesday to 1.85%. The move was as expected by the RBA board. This confirms the rate cycle has accelerated. The RBA expects to take further steps over the months ahead, but it is not on a pre-set path. This is the fourth-rate hike by the RBA since 2010. Australian employment is growing strongly, consumer spending has been resilient.  RBA patience at an end Highlights Cash rate … Continue reading “RBA Raises Rates Another 50bps to 1.85% as Expected”

Emerging Markets Longest Streak of Withdrawals Ever with Risk Spread Contagion

Emerging markets have seen the longest streak of withdrawals on record, for five straight months flows have been aggressively flowing out. The soaring US dollar is causing systemic de-risking and deleveraging throughout the global periphery and frontier emerging markets. Liquidation and default risks are high in areas like private equity and venture capital. These types of reactions feed on with higher interest rates, stymieing growth and increasing risk. In July outflows by international investors in EM stocks and domestic bonds … Continue reading “Emerging Markets Longest Streak of Withdrawals Ever with Risk Spread Contagion”

Baltic Sea Freight Index Falls to Five Month Low Down 15.4% for July.

The Baltic Exchange’s dry bulk sea freight index booked its worst month since January on Friday with rates across component vessel segments down double digits for the month. The BDI factors in rates for capesize, panamax and supramax shipping vessels, fell 50 points Friday, or 2.6%, to 1,895 points, its lowest in over five months. The capesize index, which had been the relative bright spot by outweighing falls in other vessel segments, lost 109 points, or nearly 5%, to a … Continue reading “Baltic Sea Freight Index Falls to Five Month Low Down 15.4% for July.”