tiptrot.com July 17, 2018

The Fed's preferred inflation measure nears its 2% target

02 May 2018, 01:20 | Cedric Leonard

An Unexpected Journey A BOE rate increase in May has gone from outside bet to sure thing and back again Source Bloomberg

An Unexpected Journey       A BOE rate increase in May has gone from outside bet to sure thing and back again              Source Bloomberg

Consumer prices stayed flat in the month of March itself, while consumer prices minus volatile food and energy rose 0.2 percent.

US inflation in March hit the Federal Reserve's 2-percent goal for the first time in a year, indicating inflation pressure building up. Backed by the full faith and credit of the USA government, it is one of the most popular debt instruments in the world. The euro dropped 0.44 percent to $1.2075, not far from its three-month lows last week of $1.2110. However, it does highlight the challenges posed when interest rates start to rise above a certain level.

The yield on the 10-year Treasury note has been rising, and on Wednesday, closed at 3 percent - a barrier that many in the financial markets view as a harbinger of economic and stock market concern.

The so-called core PCE price index - the Federal Reserve's preferred measure of inflation - rose 0.2 month-on-month in March after a similar gain in February.

If inflation does rise above 2 percent on a sustained basis, then the Fed will effectively be missing on both sides of its mandate. It's yield, the rate of return one gets for investing in the note, is used to set interest rates for many forms of consumer and business long-term debt, such as mortgages, vehicle loans and the financing of machinery and equipment. As Caterpillar is often viewed a proxy for the health of the US economy and stock market, the Dow Jones Industrial Average fell 425 points, reflecting concerns of higher borrowing costs for the rest of corporate America. The dollar has surged over 3 percent in the last two weeks.

Away from the favorable base effects, inflation is rising thanks to a tightening labor market.

Consumers resumed spending in March following two months of sluggishness, while their incomes continued to grow, the Commerce Department said Monday.

Inflation is also likely to be fanned by an anticipated pickup in economic growth, driven by a $1.5 trillion tax cut package and increased government spending. The rebound in real consumer spending last month supports expectations that consumption was held back by temporary factors and will gain steam in the second quarter.

When adjusted for inflation, consumer spending increased 0.4 percent in March. The data was included in last Friday's advance first-quarter gross domestic product report.

The department said Friday the US economy grew by 2.3 percent during the first quarter of this year - a slower pace than the previous quarter.

Technology sector results so far - at least from the likes of Amazon, Alphabet, Microsoft, Samsung and SAP - have broadly beaten forecasts for Q1 and the overall aggregate US earnings growth is tracking seven-year highs of nearly 25 percent. There were also increases in purchases of recreational goods.

Elsewhere, the dollar rose versus the Japanese currency, up 0.2 percent to 109.25 yen, having set a 2-1/2 month high of 109.54 yen on Friday.

Other News


Trending Now

Elimination Game 6: Milwaukee Bucks vs. Boston Celtics
Playoff Delly is an actual thing, and he's arrived just in the knick of time for this Milwaukee Bucks squad. Game after game the stage gets bigger for the young guns from Boston Jaylen Brown and Jayson Tatum .

Facebook Announces Expansion of AR Across its Apps at F8 2018
Facebook partnered up with Sketchfab, which provides a library of models you can download and use in your own projects. M Suggestions now operate in 11 countries and are available in English, German, Spanish, French, and Thai.

'Major Development' in Golden State Killer Case, Authorities Say
Like they did for Edward Wayne Edwards , twenty-nine years after he killed Timothy Hack and Kelly Drew, in Sullivan, Wisconsin. McNamara never lived to finish the book, I'll Be Gone In the Dark, or get it published after she suddenly died in 2016 .

The games Marcos Alonso will miss for Chelsea after FA confirm suspension
As a result, the Spaniard will miss the FA Cup semi-final against Southampton on Sunday and Premier League matches with Burnley and Swansea.

Capitals even series at 1 after 4-1 win in Game Two
Then there was Tom Wilson! That will make Wilson eligible for Game 3 on Tuesday night, but Dumoulin's status remains uncertain. NOTES: The Capitals have now killed 22 consecutive penalties dating to Game 2 of their first-round series against Columbus.

Armenian Genocide Marchers Demands: Remember Torture, Starvation, Death
Forty eight US states have recognized the Armenian Genocide through resolution or proclamation. Jerry Brown issued a statement Tuesday recognizing the genocide.

Judge tosses Manafort civil suit challenging special counsel
In dismissing Manafort's lawsuit, Jackson did not address the substance of Manafort's arguments about Mueller's authority. She added that if Manafort's concerns would be more appropriately brought in a criminal case.

Saudi Arabia's first cinema in 35 years opens with Black Panther screening
Most of the planned reforms also have a practical goal like revamping Saudi Arabia's economy in the face of lower oil prices. Saudi Arabia's powerful conservative clerics claimed Western movies did not meet their hard-line interpretations of Islam.

NY GOP on Senate control: 'We are ready for this fight'
Democrats in New York flipped a New York Assembly seat on Tuesday, winning a seat that has been in GOP hands for almost four decades.

Running Wild With the Pirates: Tigers 13 Pirates 10
Nova, who forced 13 groundball outs, allowed just six hits, no walks and struck out five in his longest outing since last May. Osuna, recalled from Triple-A Indianapolis, hit a three-run homer in the second and singled and scored in the seventh.