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Thursday, June 13, 2013

Friday: Industrial Production, PPI, Consumer Sentiment

by Calculated Risk on 6/13/2013 07:36:00 PM

From Victoria McGrane at the WSJ: Fed's Bond-Buying Wild Card: Inflation Expectations

"It is no longer clear that inflation expectations are so stable," Jan Hatzius, chief economist at Goldman Sachs Group Inc., said in an interview. Market-based measures of inflation expectations are now on "the low side of comfortable." In a note to clients June 10, he predicted that expectations of lower inflation are likely to make Fed officials less willing to pull back on the bond-buying programs out of fear it could destabilize those expectations about future inflation.
If there is a concern about inflation, it is that inflation is below the Fed's target (those predicting hyperinflation have consistently been wrong). With the unemployment rate at 7.6% and inflation falling, it is very unlikely the Fed will reduce their monthly asset purchases any time soon.

Inflation Measures Click on graph for larger image.

This graph shows the year-over-year change for four key measures of inflation for April: median CPI, trimmed-mean CPI, core CPI and core PCE. On a year-over-year basis, the median CPI rose 2.1%, the trimmed-mean CPI rose 1.6%, and the CPI less food and energy rose 1.7%. On the graph, Core PCE is for March - core PCE for April was at 1.1% year-over-year.

On a monthly basis, median CPI was at 1.8% annualized, trimmed-mean CPI was at 1.0% annualized, and core CPI increased 0.6% annualized.  Core PCE for April increased 0.1% annualized.

Friday economic releases:
• At 8:30 AM, the Producer Price Index for May will be released. The consensus is for a 0.2% increase in producer prices (0.1% increase in core).

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for May. The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 77.9%.

• At 9:55 AM, the Reuter's/University of Michigan's Consumer sentiment index (preliminary for June). The consensus is for a reading of 84.5, unchanged from May.