The Federal Reserve is prepared to let inflation run above its two-percent target, according to the minutes of its policy meeting held earlier this month. The bond market appears comfortable with the news: the implied inflation forecast (based on the yield spread between nominal and inflation-indexed Treasuries) ticked down yesterday, reaching the lowest level in over a month for the 10-year maturities. Meanwhile, the crowd continues to bet that the central bank will continue to raise interest rates, including a hike at next month’s FOMC meeting. A period of dovish tightening, in other words, prevails.
Continue reading →

N. Korea again raises doubts about summit with US: MarketWatch
Trump is eyeing new tariffs on auto imports into US: CNN Money
US disinvites China for naval exercise: Politico
New US home sales dipped in Apr but continued to rise on y-o-y basis: MW
Fed minutes: officials will let inflation run above 2% target: CNBC
US opens investigation into Bitcoin manipulation: Bloomberg
US economic activity strengthened to a 3-month high in May: IHS Markit