The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to rise fractionally in the June update that’s scheduled for tomorrow (July 23), based on The Capital Spectator’s average point forecast for several econometric estimates. The projection for -0.12 is slightly above the -0.16 reading for May, which reflects a below-average pace of economic growth for the US relative to the historical trend. Only negative values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for June as a guide, CFNAI’s three-month average is expected to reflect an expansion that’s below the historical trend rate but still well above the tipping point that marks the start of a new recession.
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Soft pricing in raw materials will likely delay a Fed rate hike for the US, opines Michael Hewson, chief market analyst at CMC Markets UK. “Given that weak commodity prices are likely to prompt a ripple-out disinflationary effect, it is hard to see how the Fed would even consider hiking rates against such a weak backdrop,” he told CNBC on Monday. But St. Louis Fed President James Bullard said this week that there’s “more than a 50% probability right now” that the central bank will raise the target rate at the monetary policy meeting scheduled for September 16-17.
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● Earnings disappointments weigh on US stocks…
● Redbook: US chain-store sales inch higher in first half of July…
● Softer global growth takes a toll on commodity prices…
● China leading index up 1% in July…
● Bank of England worried about inflation…
● Italy’s factory orders slump in May…
● Greek parliament set to vote on more austerity measures.