The US economy posted a slightly stronger pace of growth in June, “led by improvements in production-related indicators,” according to today’s release of the Chicago Fed National Activity Index, a weighted average of 85 economic data sets. The improvement boosted the three-month moving average (CFNAI-MA3) of the Chicago Fed Index to -0.26 last month, up modestly from the revised -0.37 for May. The increase in the three-month average is slightly better than my average econometric forecast for this benchmark.
Daily Archives: July 22, 2013
Stocks, Inflation Expectations, & “High-Powered” Money Supply
Inflation expectations and the US stock market are again moving in the same direction, for the first time this year since early February. The new abnormal, as I like to call it, appears to have made its return after a roughly four-month hiatus that had investors and economists scratching their heads about the implications for markets and macro. It’s still early to write the final chapter on what it all means, but it looks like a return to form in recent weeks. That is, the stock market’s recent gains are again accompanied by rising inflation expectations, based on the yield spread between the nominal and inflation-indexed 10-year Treasuries.