Recap 7-17-12

Main Items:

  • US CPI was stable at 1.7% YoY in June vs 1.6% exp. The core measure declined to 2.2% as exp vs 2.3% prev
  • NAHB Housing Market Index jumped to 35 in July vs 30 exp and 29 prev
  • Bernanke:
  1. I would like to highlight two main sources of risk: The first is the euro-area fiscal and banking crisis; the second is the U.S. fiscal situation.

BoC kept policy unchanged as exp.

  1. The economy is expected to reach full capacity in the second half of 2013, thus operating with a small amount of slack for somewhat longer than previously anticipated.
  2. Given the recent drop in gasoline prices and with futures prices suggesting persistently lower oil prices, the Bank expects total CPI inflation to remain noticeably below the 2 per cent target over the coming year before returning to target around mid-2013.

RBA: Members continued to view it as appropriate for interest rates to be a little below average given evidence of slower global growth and the low rate of inflation in Australia. But with a material easing in monetary policy having occurred over the preceding six months or so, and with recent signs that the domestic economy had a little more momentum than had earlier been indicated, members saw no need for any further adjustment to the cash rate at this meeting.

The National Development and Reform Commission in China said the railway infrastructure investment may double in the second half of this year from the first six months in an attempt to reverse the slowdown in the economy.

U.S. Corn Crop Worsened Last Week As Midwest Drought Spread. USDA update last night showed ~31% of corn was in ‘good’ or ‘excellent’ condition as of yesterday vs. 40% a week ago. Soybeans are at 34% vs. 40% last week. The ratings are the worst for both crops for this time of year since the drought in ’88. BBG

Calpers earned 1% in fiscal 2012.


  • German Zew survey of Economic Sentiment declined to -19.6 in July vs -20 exp and -16.9 prev
  • UK CPI declined to 2.4% YoY in June vs 2.8% exp and prev. The core measure declined to 2.1% vs 2.5% exp and 2.2% prev.

Upcoming Data:

  • Wed: BoE minutes, UK Unemployment, US Housing Starts, Humphrey-Hawkins
  • Thurs: US Jobless Claims, Philly Fed, Existing Home Sales
  • Fri: Canada CPI
  • Mon: EU Consumer Confidence, US Crop conditions
  • Tues: EU PMI, US Markit PMI, RichmondFed, Japan Trade Balance, Australia CPI

Commentary & Links:

Bernanke said that the FOMC saw the two biggest sources of risk to be Europe and the US fiscal situation. This is notable in that both sources were outside the Fed’s control. This suggests that, barring additional shocks, the Fed is likely to wait for additional clarity around these risks before taking further action.