Thursday, 15 June 2006

Inflation not cooling yet

The inflation data continue to look bad. From Reuters:

Rising rents pushed up U.S. core consumer prices a steep 0.3 percent for a third straight month in May, according to a government report on Wednesday that cemented expectations of higher interest rates.

Overall consumer prices rose an even swifter 0.4 percent, as surging energy costs continued to pressure U.S. households, the Labor Department report showed...

Prices for U.S. government bonds fell sharply as traders saw the report boosting chances of further interest rate increases from the Federal Reserve. Interest rate futures markets fully priced in a rate rise at the central bank's next meeting on June 28-29 and began to brace for even more.

However, U.S. stock markets -- battered in recent sessions by inflation jitters -- managed to shake off the news with help from upbeat brokerage reports, while the dollar fell.

Separately, the Fed said in its "beige book" report that U.S. economic growth appeared to have slowed recently, but that inflation seemed to have gotten a better foothold, as well.

And Calculated Risk highlights the fact that the Mortgage Bankers Association's Market Composite Index rose last week, a respite for the housing market and thus, the economic outlook.

On the other hand, Paul Kasriel says that retail sales, reported a day earlier, fell 0.6 percent in May and 0.3 percent in April after adjusting for goods price inflation.

Elsewhere in the world, there were few signs of cooling.

China's industrial production grew 17.9 percent in May from a year ago.

British wages rose at an annual rate of 4.4 percent in the three months to April -- the highest in a year -- although the jobless rate rose to 5.3 percent, and British house prices rose at their fastest pace in two years in the three months to May according to the Royal Institution of Chartered Surveyors.

In France, the consumer price index rose 0.4 percent in May and 2.1 percent from a year earlier, the annual rate rising from a 1.7 percent rate in April, while the Bank of France yesterday raised its forecast for growth of the French economy in the second quarter to 0.7 percent from 0.6 percent and reported that its index of French business confidence had risen to 111 in May from 106 in April.

1 comment:

Anonymous said...

rising rents and energy costs, prices for government bonds falling and seeming like they will continue to..why does it seem as if we staring into the eye of apocalyse, but no one wants to really call it that yet?

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