Recap 6-17-13


Quick note on the low levels of 5y5y inflation breakevens – many people, including Bullard, has noted that it is on the low side, and that the FOMC leadership probably wants it higher. The chart below is Bloomberg’s estimate of that measure:

Of course, any mention of inflation expectations being low on Wed would be seen as very dovish. But it appears unlikely that the Fed would say that. Not only would such a statement go against the recent tapering talk, but the last times forward expectations were at 2.4%, (mid 2010, late 2011, mid 2012) the FOMC statements have all stated that “longer-term inflation expectations were stable.”


  • US NAHB Survey jumped to 52 in June vs 45 exp and 44 in May. This is the highest print since 2006:

  • US Empire Mfg rose to 7.8 in June vs 0 exp and -1.4 exp
  • FDIC’s vice chairman said Deutsche Bank is “horribly undercapitalized.”
  • UK property prices rise to a record high. Rightmove’s monthly house price index increased 1.20% m/m in asking prices of property advertised and +2.70% higher on the year.

Upcoming Data:

  • Mon: RBA Minutes,
  • Tue: UK CPI, German Zew, US CPI, Housing Starts, Japan Trade Balance,
  • Wed: BoE Minutes, FOMC, BoC Governor Poloz Speech
  • Thu: EU PMI, UK Retail Sales, US Jobless Claims, Markit PMI, Philly Fed, Existing Home Sales,
  • Fri: Canada CPI, Retail Sales,