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Rick Rieder

13 Oct, 10 tweets, 7 min read

With respect to today’s #inflation data, core #CPI (excluding volatile food and energy components) came in at 0.24% month-over-month and 4.04% year-over-year and was driven higher by strong increases in the #rent components, which have a tendency to be persistent.

Further, headline #CPI data printed at a solid 0.41% month-over-month and came in at 5.38% year-over-year.

Today’s data witnessed declines in used vehicles, #airfares and lodging, which should temper #market concerns somewhat, but we anticipate that these components are likely to see #prices bounce back in the months to come.

Due to the #economic disruptions resulting from the varying speeds of reopening across the country, as well as the significant #ProductionConstraints due to continued #semiconductor shortages…

…we think it makes sense to look at the core CPI ex-reopening and chip shortage components to monitor strength in underlying #coreCPI.

That index, isolating temporary factors contributing to #PriceVolatility in certain regions of the #economy, strengthened in August and again saw a decent gain in September, of 0.28%.

@federalreserve

From the standpoint of #MonetaryPolicy, the @federalreserve lacks the ability to meaningfully influence the supply side of the #economic picture, and broadly speaking demand (which the central bank does have tools to impact) isn’t a problem for the economy today.

As a result, the #Fed probably will (and should) continue its plan to #taper excessive #liquidity accommodation in the very near future, with the conclusion of that process taking place sometime in mid-2022.

The fact is that #coreCPI has already overshot its pre-Covid trend, and forecasters are still calling for the highest levels of #inflation since the early 2010s, after the Fed has battled #disinflationary pressures for years.

To some degree, this would appear to signal a great success on the #inflation front, so why squander it with the potentially added #risk of remaining excessively accommodative for too long?

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Rick Rieder

@RickRieder

8 Oct

September witnessed a somewhat disappointing nonfarm #payroll gain of 194,000 jobs, which was weaker than the upwardly revised August gain of 365,000 and was well below #economists’ consensus estimates of nearly 490,000 jobs.

Clearly, there are significant #labor supply issues limiting the pace of recovery. Further, the #unemployment rate declined meaningfully, from 5.2% to 4.8% in Sept, and average hourly #earnings saw gains of 0.62% m-o-m, which brings the measure to 4.58% greater on a y-o-y basis.

The most interesting part of today’s #JobsReport, and much of the other recent #economic/corporate data, is that it’s the supply of resources that’s creating systemic pricing pressure, as well as consequently dulling growth of an #economy not lacking demand in virtually any area.

Read 11 tweets

Rick Rieder

@RickRieder

23 Sep

@federalreserve

As expected, the @federalreserve’s Federal Open Market Committee continued to discuss its plans to reduce, or #taper, the pace of its #AssetPurchase program at yesterday’s meeting.

While the details of this discussion were fairly sparse, the Committee statement did state that: “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”

Further, at the recent #Fed conference in Jackson Hole, Wyo., and at the press conference, Fed #ChairPowell emphasized that both he and most Committee participants now consider the test of “substantial further progress” toward the #inflation mandate to be largely satisfied.

Read 10 tweets

Rick Rieder

@RickRieder

14 Sep

In August we saw #inflation growth moderate further, for the second consecutive month, at least relative to the impressive rate of growth in #prices witnessed around mid-year.

Core #CPI (excluding volatile food and energy components) came in at 0.10% month-over-month and 3.98% year-over-year, which was considerably less than the consensus forecast and was driven higher by #shelter components.

Meanwhile, headline #CPI data printed at a solid 0.27% month-over-month and came in at 5.20% year-over-year.

Read 11 tweets

Rick Rieder

@RickRieder

27 Aug

It was 73 degrees and sunny in #JacksonHole, Wyoming, today; a perfect day for all those who were there….

@KansasCityFed

Yet, there were no #monetary policy officials present at the traditional location of the @KansasCityFed’s late-summer #economic policy symposium, since they were conducting a “virtual symposium.”

That symposium provided #ChairPowell the opportunity to lay out a reasonably sunny perspective on the U.S. #economy, but also one that was not out of the woods yet, in terms of Covid variant risk and a maximum #employment target still to be achieved.

Read 10 tweets

Rick Rieder

@RickRieder

11 Aug

Inflation data for July moderated somewhat, at least relative to the heady pace of recent months, which should temper #market and policymaker concerns a bit, despite the fact that #inflation will stay sticky-higher for a while and the #risk remains to the high-side.

Core #CPI (excluding volatile food and #energy components) came in at 0.3% month-over-month and 4.3% year-over-year, a bit less than the consensus forecast, and headline CPI data printed at a solid 0.5% month-over-month and came in at 5.4% year-over-year.

While we think that it’s hard to see a case for the recent levels of elevated #inflation turning into “1970s style” runaway price increases, higher #wages and elevated growth for an extended period will allow companies to achieve higher levels of #PricingPower for a time.

Read 7 tweets

Rick Rieder

@RickRieder

21 Jul

@MerrillLynch

Great conversation with @MerrillLynch CIO Chris Hyzy, as part of their #MerrillPerspectives event. Some of the topics we discuss follow and the full conversation can be accessed here: ml.com/2021-midyear-e…

On the #market lessons stemming from the pandemic, I suggested that- stepping back- while a lot has been thrown at the #economy and markets over the past 30 years, in every case the #policy response has been critical to evaluate in judging the ultimate impact: policy matters!

That said, we think there is an overestimation of the importance of exceedingly low #policy rate levels to the recovery but maintaining the stability and #liquidity of the financing #markets is critical, particularly at the top end of the capital stack.

Read 10 tweets

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