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Realistbear

U S Release Inflation Rates -- Above Expectations

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http://freeserve.advfn.com/news_U-S--March...-_15084080.html

U.S. March CPI up 0.4%, core up 0.3%

WASHINGTON (AFX) - U.S. consumer price index rose 0.4% in March, the Labor
Department reported Wednesday. Prices were higher across the board, with only
natural gas, new vehicles and education prices declining in the month.
The
increase was above Wall Street's expectations of a 0.3% gain. The core CPI,
meanwhile, increased 0.3%, a tick higher than the 0.2% gain expected. This is
the largest increase in core prices since last March.
The CPI has risen 3.4% in
the past 12 months, down from 3.6% last month. The core rate is up 2.1%
year-over-year, the same as last month. In March, energy prices rose 1.3%. Food
prices rose 0.1%. Housing prices increased 0.2%.

TTRTRates again?

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PMSL! :P

Looks like 5% may be "just an illusion"

With the dollar in freefall, and inflation climbing, 5.5% looks more realsitic i thinks, this moving data is confusing and forever changing future expectations, they aint coming down :lol:

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Bloomberg

April 19 (Bloomberg) -- U.S. Treasuries fell after a government report showing inflation quickened in March bolstered the view that the Federal Reserve may raise interest rates twice more by mid-year.

Treasuries dropped for the first day in three as traders increased bets the central bank will llift target for the overnight lending rate at each of its next two meetings. The minutes of the Fed's most recent meeting on March 28, released yesterday, said policy makers recognized ``the upside risks'' to faster inflation.

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You could almost feel sorry for the Bulls, when this very morning they were clutching onto a glimmer of hope that the US would stop at 5.0% and then this bombshell.

All short sterlings earlier gains have been erased and its down again :lol::lol::lol:

You can analyse this til the cows come home but world interest rates are too accomodative and inflation is starting to feed through, there is only one solution and that is to raise rates to a neutral level and we are currently not at it. :)

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Looks like the BoE are moving to the upside according to the currency insiders:

http://biz.yahoo.com/fxcm/060419/1894949970.html?.v=1

Wednesday April 19, 6:50 am ET

By Boris Schlossberg, Senior Currency Strategist strategist@dailyfx.com

The voting result was expected, but the hawkish tone of the discussion, with MPC members suggesting that
future risks lay more to the upside
, helped fuel the pound higher with traders abandoning any expectation of a rate cut by the Bank in Q2.

Low IR seem to be a feature of the economic cycle we are moving out of. Today's inflation news from the US may start to work its way through the press and the dollar will react accordingly. Speculators must be having a field day with such dramatic moves.

Just checked, Pound down 13 ticks in a few minutes to 1.7835.

Edited by Realistbear

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Guest

I'm still happy buying my gold.

It's an inflationary hedge.

They'll have to stop somewhere with the rate raises, especially if it's more than 6%.

EDIT - sorry I mistyped there.

Edited by megaflop

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http://freeserve.advfn.com/news_Forex---Do...I_15085612.html

Forex - Dollar bounces back from 7-month euro low after CPI

NEW YORK (AFX) -- The dollar rallied against major rivals early Wednesday
after a consumer price report showing higher inflation boosted speculation the
Federal Reserve will keep lifting interest rates.

Seems that a few hours is a long time in the world of the currency traders?

[

b]Sterling up
[/b]
on hawkish BOE
Overnight, the British pound picked up strength, buoyed by
hawkish minutes
from the Bank of England's April 5-6 meeting
"The hawkish tone of the discussion...helped fuel the pound higher with
traders
abandoning any expectation of a rate cut by the bank
in Q2," said Boris
Schlossberg, senior currency strategist at Forex Capital Markets.
Elsewhere, the
Japanese leading economic index was revised up to 90.9%
, the
second highest reading since 2000, suggesting economic growth in the world's
second-largest economy remains robust.
Edited by Realistbear

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This is massive news. Inflation is remaining high in the US, even after raising rates to 4.75%. Bonds are going to continue their downward trend and that's going to mean more expensive borrowing guys and particularly on mortgages.

Better get in quick and snap up the fixed rate mortgage bargains while they're still around ;) Well, maybe not.

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NEW YORK (AFX) -- The fed funds futures market is pricing in a slightly

higher probability that the Federal Reserve will raise overnight interest rates

by 0.25 percentage points after its May 10 policy setting meeting, after March

consumer inflation data came in a touch higher than expected. The May futures

contract is now implying a fed funds rate of 4.95% in mid-May, which suggests an

80% chance of a quarter-point hike, vs. a 76% chance of a hike on Tuesday. The

July contract is now pricing in a 70% chance that the fed funds rate will reach

5.25% after the next two Fed meetings, vs. a 66% chance on Tuesday. The U.S.

Labor Department said the consumer price index rose 0.4% in March vs.

expectations of a 0.3% rise. Excluding food and energy, the core CPI rose 0.3%

vs. forecasts of a 0.2% increase.

*****************

5.25% is more probable than not (0.8 x 0.7 = 56% probability).

TNX back up today, too:

http://bigcharts.marketwatch.com/charts/bi...4009&mocktick=1

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More news that points to Bernanke moving well beyond 5%:

http://biz.yahoo.com/ap/060419/economy.html?.v=8

Core inflation, which excludes food and energy, posted a 0.3 percent rise in March. It was the biggest gain in core inflation since a similar increase in March 2005 and could be a worrisome signal that higher energy prices are starting to spill over into more widespread inflation pressures.
Analysts said that a rise in mortgage rates was making it harder for potential home buyers to afford new homes, thus increasing the demand for rental units and putting more pressure on rental prices.
"If this continues, it can do real damage to core inflation, making it all the more important that the Fed succeeds in slowing the economy to ease inflation pressure," said Ian Shepherdson, chief U.S. economist for High Frequency Economics, a private consulting firm.
Through the first three months of this year, overall inflation has been rising at a 4.3 percent annual rate, far above the 3.4 percent price increase for all of 2005. The price acceleration reflected rising energy prices, which are up 21.8 percent at an annual rate through March, compared to a 17.1 percent rise for all of 2005.

I think we are in the sucker's rally at present with some stock corrections yet to come. Looks like nothing has changed and IR are still headed up. Factor in Japan's rising inflation and its a certainty.

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Guest

How long before sterling takes a hit, then?

If the FED raise?

And assuming the BOE still hold?

Experts?

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Guest Bart of Darkness

I'm still happy buying my gold.

It's an inflationary hedge.

Hi megaflop.

Are you still buying at current prices or are you considering the possiblity of a pullback/profit taking?

Not much sign of that at the moment though.

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Hi megaflop.

Are you still buying at current prices or are you considering the possiblity of a pullback/profit taking?

Not much sign of that at the moment though.

Yes I have bought today.

I just don't know what to think about the pullback theory.

People seem to have started to use gold as money. (IMHO according to my many recent reads!)

It's certainly behaving differently to what the seasonal chart suggests "should" happen.

I am now 10% in, and am doing this because of what I believe the US$ situation is going to be over the forthcoming months. "The Race To The Bottom" features heavily.

World troubles are not a reason I am buying some gold.

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How long before sterling takes a hit, then?

If the FED raise?

And assuming the BOE still hold?

Experts?

IMHO sterling is being propped up by the perception that the economy is strong underpinned buy healthy employment numbers, low interest rates and a surging property market. In other words they are buying into the VI spin.

The BoE's minutes have been interpreted as hawkish--meaning higher IR later this year. That had a dramatic effect on the pound.

Many more announcements like we had today from Peugeot and I would expect to see the perception of the UK as a healthy economy start to erode.

But GB Pound currently way up at 1.79USD and 1.45 Euro

Has hawkish BOE minutes caused this??

Yes.

http://today.reuters.co.uk/investing/finan...-MIDSESSION.XML

Sterling firm vs dollar, euro after BoE minutes
Wed Apr 19, 2006 10:31 AM BST
Printer Friendly | Email Article | RSS
LONDON, April 19 (Reuters) - Sterling hit its highest in nearly three months against the dollar on Wednesday and ticked higher versus euro after the minutes of the Bank of England's April meeting showed policymakers saw upside risks to inflation

The markets realise that the BoE must raise the rates considerably higher than where they are today due to a number of factors: inflation, Japanese moves, currency protection--inflation protection.

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IMHO sterling is being propped up by the perception that the economy is strong underpinned buy healthy employment numbers, low interest rates and a surging property market. In other words they are buying into the VI spin.

I'm not so sure: that would imply there's a heck of a lot of money in the hands of some very stupid people.

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I'm not so sure: that would imply there's a heck of a lot of money in the hands of some very stupid people.

The herd is what drives markets it seems. Look at how many people who have bought houses since the peak in 2004. I am afraid gold buyers may get stung as the history of commodities does show violent peaks and troughs and a single word of reconcilliation from Iran and 20% will be wiped off gold in an instant.

Warren Buffett sems to advise against following herds and my guess is that he is not buying too much gold these days. If he holds gold he bought a long time ago.

Seems that the markets are hesitant that the pound can mainatin long term strength:

http://www.forexrate.co.uk/news/index.php?itemid=1126

19 April

Sterling on fragile ground

Sterling continued to take advantage of dollar vulnerability and strengthened to highs above 1.7850 in Europe on Monday after a weak corrective dollar recovery back...

... to 1.7810.

Sterling has proved relatively resilient against the Euro over the past 24 hours with only
limited losses to 0.6930 in early Europe on Wednesday.
The Bank of England minutes recorded
a 7-1 vote for unchanged rates in April with one seat vacant while Nickell again
voted for a 0.25% rate cut. The most likely outcome is that the bank will leave
interest rates on hold in the short term. Sterling will secure some further
protection against the dollar from the reduction in US interest rates
expectations in the short term, but there are still likely to be concerns over
the UK economic outlook, especially in the manufacturing sector.
Any sustained drop in global
liquidity would also tend to lessen the potential for capital flows into the UK
markets and the UK fundamentals do not look convincing which will limit the
potential for Sterling gains on a trade-weighted basis.

If anyone is visiting the States soon now might be a good time to buy a few $.

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IMHO sterling is being propped up by the perception that the economy is strong underpinned buy healthy employment numbers, low interest rates and a surging property market. In other words they are buying into the VI spin.

No way. I think the market are buying a couple of rate rises from the Bank of England. If the Bank holds out longer than the market expects then Sterling will fall, but they won't. Both the US and UK are 'serious' about targetting inflation.

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No way. I think the market are buying a couple of rate rises from the Bank of England. If the Bank holds out longer than the market expects then Sterling will fall, but they won't. Both the US and UK are 'serious' about targetting inflation.

I hope you are right. Gordon is going to have to bite the bullet either way. The question is does he hike and cause a recession or drop and cause hyper-inflation. Or do nothing a get a mixture both?

It may all be academic as the rate moves by the BoJ and the Fed will determine which way the BoE must go.

The last few reports I saw from the FX currency site did say the ongoing strength in HPI was a reason to hold sterling up--some believe in the lie at least.

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I am afraid gold buyers may get stung as the history of commodities does show violent peaks and troughs and a single word of reconcilliation from Iran and 20% will be wiped off gold in an instant.

Point taken. But I'm not in because Ayatollah Whoosit might say "Let's have a ding-dong", I'm in because of the inflation issue longer term.

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This is how the bond market reacted

10-year yield jumps back above 5%

Quote

NEW YORK (CNNMoney.com) - An uptick in consumer prices and comments from a Federal Reserve policy-maker rattled bond investors Wednesday, sending Treasury prices sharply lower and pushing the yield on the benchmark 10-year note back above 5 percent.

The dollar fell against the euro and edged lower versus the yen.

The 10-year Treasury sank 10/32 to 95-29/32 to yield 5.03 percent, up from 4.98 late Tuesday. The benchmark yield surpassed the 5 percent mark for the first time since June 2002 last Thursday.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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