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HomeEconomyWeekly Commentary: Global Crisis Dynamics Update

Weekly Commentary: Global Crisis Dynamics Update


CPI was up 9.1% y-o-y in June, the highest rate, as we all know by now, since 1981. Up 11.3% y-o-y, Producer Prices were also significantly above estimates. Retail Sales were stronger-than-expected, and there was even a decent pop in the Current Conditions component of the early-July confidence reading from the University of Michigan survey. Following last week’s strong payrolls report, data point to relatively resilient demand and pricing pressures. (Almost) Everything points to a second 75 bps hike at the FOMC’s July 27th meeting.

Yet 10-year Treasury yields dropped 16 bps this week to 2.92%, with yields now down about 56 bps from the June 14th peak. And with two-year yields up two bps this week (3.13%), the U.S. yield curve (2yr/10ry) ended the week inverted 20 bps. While conventional thinking points to imminent U.S. recession, it’s somewhat of a challenge to explain this week’s yield curve gyrations by domestic…

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