The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to tick higher in tomorrow’s May report, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection for -0.15 reflects a modest improvement over the previous month. The forecast for May still anticipates that US economic growth is running below the historical trend rate for expansion. But the projection also points to a 3-month CFNAI reading that’s well above the level that marks a new NBER-defined recession.
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Daily Archives: June 22, 2016
Treasury Market’s Inflation Forecast Holds Near 4-Month Low
Treasury market inflation expectations remain close to the lowest level since February, when economic worries were elevated. The yield spread for the nominal 10-year Treasury Note less its inflation-indexed counterpart was unchanged yesterday (June 22) at 1.43%, based on daily data via Treasury.gov. That’s near the lowest level since February—a sign that the bond market is cautious on the outlook for the US economy. Or is it a byproduct of temporary Brexit fears, which may or may not lift after tomorrow’s referendum in the UK that will decide if Britain remains in the European Union? Whatever the source of the downside bias in Treasury inflation expectations of late, the soft trend contrasts with the recent rebound in the US stock market, which implies that any macro worries are exaggerated for the world’s largest economy.
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