reports
- Conrad DeQuadros
- John Ryding
Weekly Macro Brief: Next week's Fed meeting, Brexit thoughts, strong e...
In this week's Macro Brief we preview next week's FOMC meeting and discuss Brexit developments after this week's drama. Our chart of the week illustrates the strength of business equipment production, which is in contrast to recent soft equipment spending data.
- Conrad DeQuadros
- John Ryding
Strong U.S. retail sales report for November
Retail sales excluding autos, building materials and gasoline—the PCE control group for GDP—rose 0.9% in November, which was much stronger than expected. In addition, this measure of core retail sales for October was upwardly revised to 0.7% from 0.3%, though this was partially offset by a 0.1%-point downward revision to September core sales. Overall retail sales rose 0.2% in November, slightly above forecasts, gasoline station sales dropped 2.3% (on lower gasoline prices). The strength of co...
- Conrad DeQuadros
- John Ryding
Core CPI inflation picked up slightly to 2.2% in November
Core CPI prices rose 0.2% in November, in line with expectations. The year-over-year core inflation rate picked up slightly to 2.2% from 2.1%. Overall CPI prices were flat (with energy prices down 2.2%) and the 12-month headline inflation rate fell to 2.2% from 2.5%. The Fed heads into its December policy meeting with both headline and core CPI running at 2.2% on a year-over-year basis, which is a pace that is broadly consistent with PCE price inflation running around the Fed’s 2% target.
- Conrad DeQuadros
- John Ryding
Macro Quick Hit: Will The Fed Get Faked Out On Inflation?
The latest PCE prices data showed a slowing in the year-over-year core inflation rate. While it appears that Fed officials still mostly view inflation as being close to their 2% target some have made references to the recent softer readings. We do not think that underlying inflation is slowing, however, there is a technical reason why inflation rates may moderate in the near-term. We argue why the Fed should avoid getting faked out by either a slowing in as-reported core PCE price gains late ...
- Conrad DeQuadros
- John Ryding
Weekly Macro Brief: Data check, the yield curve, leading indicators
In this week's Macro Brief—given continued market volatility—we do a reality check of the recent economic data reports, we provide some thoughts on the Treasury yield curve, and we discuss leading indicators within the real economic data.
- Conrad DeQuadros
- John Ryding
Nonfarm payrolls rose 155K in November; unemployment rate held at 3.7%
Nonfarm payrolls rose 155,000 in November with private payrolls up 161,000. The unemployment rate held steady at 3.7% and year-over-year wage growth was unchanged at 3.1%. While the payroll gain was modestly below expectations, it was well within the margin of error of forecasts and the average growth in payrolls over the last three months, at 170,000, remains well above what we judge to be the underlying growth in the labor force. None of this should change thinking at the Fed about raising rat...
- Conrad DeQuadros
- John Ryding
Strong ISM for November as orders, employment and production picked up
The ISM manufacturing index was stronger than forecasts rising to 59.3 in November from 57.7 in October. A reacceleration in the growth of new orders accounted for more than half of the gain in the manufacturing ISM headline index in November. The report also showed faster growth in output and employment.
- Conrad DeQuadros
- John Ryding
- Conrad DeQuadros
- John Ryding
Fed Watching: Powell’s Speech to the Economic Club of New York
Fed Chairman Powell delivered a speech titled The Federal Reserve’s Framework for Monitoring Financial Stability to the Economic Club of New York this afternoon. The bulk of the speech addressed topics related to financial stability but Powell made a remark about the fed funds rate being “just below the broad range” of estimates of neutral, triggering a sharp rally in the equity market and in the front end of the Treasury market. In a Macro Quick Hit we published earlier this week we concluded “...
- Conrad DeQuadros
- John Ryding
Clarida’s Strategy for Monetary Policy and Data Dependence
Yesterday, Fed Vice Chairman Richard Clarida laid out the broad strokes for a monetary policy strategy (see Data Dependence and U.S. Monetary Policy). He pointed out that while policy should be data dependent, data-dependency “is not, in and of itself, a monetary policy strategy.” Clarida sees a strategy as a way “to combine incoming data and a model of the economy with a healthy dose of judgment…to formulate, and then communicate, a path for the policy rate most consistent with our policy objec...
- Conrad DeQuadros
- John Ryding
What Are The Odds Of A Powell Put?
The perception of a ‘Fed put’ has its origins in the Greenspan-led FOMC responses to the equity market crash of October 1987 and the Long-Term Capital Management crisis. We assess if there is any substance to the notion that the Fed responds to stock market declines per se and we discuss the odds of a Powell put.
- Conrad DeQuadros
- John Ryding
Weekly Macro Brief: Oil and Stocks, Housing, Key Events Next Week
We are sending out our weekly Macro Brief early ahead of the Thanksgiving day holiday. In this week's Macro Brief we discuss oil prices and the equity market, the housing slowdown, and we look ahead to some key events next week. Our chart of the week illustrates the relationship between oil prices and implied inflation breakevens from TIPS.
- Conrad DeQuadros
- John Ryding
- Conrad DeQuadros
- John Ryding
Weekly Macro Brief: Thoughts on Powell and Clarida; Easier Credit; Bre...
In this week's Macro Brief we provide some thoughts on Fed Chairman Powell and Vice Chairman Clarida's appearances and the resulting shift in market expectations for the fed funds rate, we discuss further evidence credit being eased, and we consider this week's Brexit developments (which have turned out to be more disorderly than we anticipated). Our chart of the week illustrates the relationship between business equipment production and corporate capital equipment investment.
- Conrad DeQuadros
- John Ryding
Manufactured production stronger than expected on solid business equip...
Manufactured production rose 0.3% in October, slightly stronger than consensus forecasts (also, September’s originally-reported 0.2% gain was upwardly revised to 0.3%). Total industrial production increased 0.1%, slightly lower than expected. Manufacturing continues to advance despite uncertainties over trade policy as manufactured output rose 3½% at an annual rate in October versus the third quarter and production of business equipment is up 11½% on the same comparison.
- Conrad DeQuadros
- John Ryding
Core retail sales were softer than forecasts
Overall retail sales rose 0.8% in October, stronger than forecasts. Headline retail sales were boosted by a price-related surge in gasoline station sales (which will likely reverse in November given the drop in gasoline prices) and a jump in building material sales (which are not included in GDP). Core retail sales were softer than expected but are still consistent with a solid gain in real PCE early in the fourth quarter
- Conrad DeQuadros
- John Ryding
Core CPI prices rose 0.2% in October
Core CPI prices rose 0.2% in October, which was in line with expectations. The year-over-year core CPI inflation rate slipped to 2.1% from 2.2% (essentially on rounding to 2.14% from 2.17%). Overall CPI prices gained 0.3% in October and the 12-month headline inflation rate rose to 2.5% from 2.3%. This inflation report is pretty much as expected and shows no change in inflation trends. Looking forward, PPI prices suggest upward pressure on core goods prices, while wage data point to upward pressu...
- Conrad DeQuadros
- John Ryding
- Conrad DeQuadros
- John Ryding
Fed Watching: Few Changes to the Policy Statement
As was widely expected, the FOMC left the fed funds rate target range unchanged at 2%–2¼% today. The vote was unanimous. The FOMC’s policy statement contained no surprises with the Fed simply noting the further decline in the unemployment rate and the moderation in business investment. The Fed remains firmly on track to raise rates for the fourth time this year at the December 19 meeting.
- Conrad DeQuadros
- John Ryding
Messages and Policy Implications From The Mixed Midterm Elections
Although the ink is still drying on the some of the results from yesterday’s midterm elections, the results appear fairly clear and there were positives and negatives for both the Democrats and the Republicans. In the attached note we discuss some of the messages and policy implications from the midterms.
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