Inflation/Deflation
The ECB’s tone has changed decisively. Intransigent forward guidance is gone; data dependency is in. What does this transition mean for the path of European interest rates and the euro?
BCA Research’s Bank Credit Analyst service recently featured currency valuation models developed by our Foreign Exchange Strategy service. According to these models, the US dollar is extremely overvalued and thus vulnerable to a structural decline. When…
On Friday, the Bank of Japan announced an important tweak to its yield curve control (YCC) program. Although it maintained the 0.5% cap on 10-year bond yields, it indicated that it will manage the program with “greater flexibility” such that the 0.5% level is…
US economic data released on Friday continued the string of good news about the US economy. On the inflation front, core PCE inflation – the Fed’s preferred gauge of underlying price pressures – softened to 0.165% m/m in June. On an annualized basis, this…
A look at recent US data on economic growth and inflation, with an update on the implications for monetary policy and bond yields.
On the surface, US economic data delivered strong upside surprises on Thursday. The advance estimate of GDP growth shows economic activity accelerated from 2.0% to 2.4% in Q2 – surprising expectations of a slowdown to 1.8%. Similarly, durable goods orders…
Looking at the complete picture of GDP growth, inflation, and unemployment, it is understandable to assume the Fed is doing much better than it expected. GDP growth is tracking to exceed the Fed's forecast, while the outlook for both inflation and…
As expected, the ECB delivered a 25 basis point rate increase on Thursday, raising the policy rate to its 2001 record high of 3.75% and marking its ninth consecutive rate increase. The most important takeaway from the meeting is the absence of forward…
The July FOMC meeting proceeded pretty much as expected. The Fed hiked by 25 basis points, bringing the target range for the funds rate up to 5.25%-5.50%. The forward rate guidance included in the post-meeting statement was also unchanged from June. It…
Australia’s June monthly CPI release shows inflationary pressures continue to moderate. Headline CPI inflation receded to 5.4% y/y -- in line with expectations – following a downwardly revised 5.5% y/y in May. To the extent that the monthly release includes…