While the data released yesterday pointed to a periodic calm down in terms of activity; It did not delay inflation expectations; on the contrary, it showed that upward concerns were active. Consumer confidence decreased to 117.2 in May; It is seen that the main factor in this is the price increases in various goods and services. In other words; the worries about the increase in inflation… The market reflection of this is not disturbing; because the dollar index is falling and 10-year yield has seen below the threshold of 1.60%.
Case Schiller index puts a more striking detail. House prices have seen the highest increase since 2005, and it appears to be due to the large demand effect versus limited supply, driven by Americans’ desire to move out of the city, into single-family homes, and this was also triggered by low mortgage rates. If low interest rates are the reason for the rise in inflation, tapering becomes inevitable for the Fed. In the Fed’s 2013 model tapering communication, inflation was below 1%, now there is a risk that the organic inflation rate will occur at 3% and stay there longer than expected.
Inflation expectations for the Fed seem to be the main determining factor at this stage. The FOMC meeting will take place on June 15-16 and whether inflation indicators and the Fed see a deterioration in terms of inflation anchor are the main indicators for the transition to the policy tightening phase. Therefore, the relevant macro data and its reflection on the 10 year yields are important. The Fed’s consistent messages that the economy still has a long way to go and that rising inflation is temporary continue to come from some regional presidents. Lael Brainard, a member of the Fed’s Board, and Esther George, a well-known hawk, were the last to submit such comments. Clarida, on the other hand, approved the FOMC minutes containing some outdated dynamics and stated that the “tapering” issue could be discussed in the next meetings.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
