- After pushing against 2.40% last Friday after a strong US average hourly earnings number, 7 days later the miss on CPI saw 10yr USTs close the week at 2.274% having traded just below 2.33% most of the session before hand. September core inflation rose only 0.13% mom (vs. 0.2% expected) and 1.7% yoy (vs. 1.8% expected). In the details, core services inflation was inline, but the main miss was on the core goods side, which fell 0.2% mom (-1% over past 12 months – the lowest reading since August 2004). Deustche Bank believes some of this weakness should prove transitory (eg: medical care commodities), but there were also more broad based signs of weakness. They expect core CPI inflation to remain near recent levels in yoy terms through 2017, albeit with risks that it now rounds down to 1.6%.
- According to FT, rising investor optimism and risk appetites suggest that investors have started falling in love with what is often called the “most hated bull market” in history. One of the main factors supporting the rally is the synchronized global economic recovery. In the second quarter, global GDP grew at its fastest clip since 2010, with recovery across developed as well as developing nations. In its latest “World Economic Outlook” the IMF raised its forecast for global economic growth to 3.6% in 2017 and 3.7% in 2018, up from 3.2% growth posted in 2016. “The current global acceleration is also notable because it is broad-based—more so than at any time since the start of this decade,” said the IMF’s chief economist. “But the recovery is not complete: while the baseline outlook is strengthening, growth remains weak in many countries, and inflation is below target in most advanced economies,” according to the report.