Part of a central bank’s challenge in setting its policy rate lies in knowing which measure of inflation to follow. From the consumer price index to the personal consumption expenditures index, different measures of inflation can tell a different story. On Friday, investors and policymakers will ... READ MORE >
interest rates
U.S. inflation expectations are well anchored as Fed nears decision
American inflation expectations remain remarkably well anchored given the price shock of the past two and a half years. Our preferred measure of inflation expectations—the Federal Reserve’s five-year forward, five-year breakeven rate and the five-year forward breakeven index—imply that professional ... READ MORE >
Jobless claims ease as housing starts drop
Initial jobless claims dropped by 5,000 last week to 238,000 yet remained elevated near a 10-month high. For now, the spike in new claims in the previous weeks looks a lot more like a seasonal issue than a deterioration in labor market conditions. In contrast, housing starts fell in May to the lowest ... READ MORE >
Retail sales and industrial production rise in May
The soft rebound in May’s retail sales was good news, suggesting that the economy might reach a soft landing sooner than expected. Total sales increased by 0.1% while the control group, which is the key metric that feeds into gross domestic production calculations, rose by 0.4%. Read more of RSM's ... READ MORE >
PCE inflation preview: From noise to norm, rate cuts are on the horizon
Following the release of the consumer price index and producer price index this week, we are now forecasting a 0.084% increase in the May personal consumption expenditures index, translating to a 2.6% increase on a year-over-year basis. This will appear in the forecast table as a 0.10% estimate. But we ... READ MORE >
Initial jobless claims jump as inflation continues to improve
Initial jobless claims jumped to 242,000 for the week ending June 8 from 229,000 the week before, the Labor Department reported on Thursday. The latest figure was the highest level in almost a year, nearing the threshold of 250,000 that in our view signals conditions for a possible recession. It ... READ MORE >
FOMC holds rates steady but is divided on their direction
The Federal Open Market Committee kept its policy rate in a range between 5.25% and 5.5% at its meeting on Wednesday while signaling through its dot plot forecast of interest rates that the committee would support at least one 25 basis-point rate cut this year. But the committee was split on the ... READ MORE >
U.S. consumer price index cools in May as gas and transportation costs decline
A gradual cooling in inflation in May because of a 3.6% decline in gasoline prices, a 1.1% drop in transportation costs and 0.5% easing in the cost of new vehicles shows that the rise in inflation at the start of the year was more noise than signal. Overall, the consumer price index increased by 3.3% ... READ MORE >
U.S. financial conditions update: A shift in structure and a new center of gravity
Monetary policy has reached a pivot point, bringing an increased probability for sustained growth and easing fears of a premature end to the business cycle. This improvement should underscore the positive outlook that will be featured in the Federal Open Market Committee’s Summary of Economic ... READ MORE >
Canada’s unemployment rate rises to 6.2 per cent, bolstering case for further rate cuts
Canada’s jobs report for May showed that the labour market continued to soften as the economy added 27,000 jobs and the unemployment rate inched up to 6.2%, a full percentage point up from a year earlier. The employment rate fell by 0.1 percentage point to 61.3% While it’s still too early to say, the ... READ MORE >