JP Morgan analysts raised their forecast for US real GDP growth to 4.3%, up from 3.5% previously. At the same time, the yield on 2-year treasuries rose 10 bps to nearly 5.2% - a record level since 2006. Richmond Fed chief Thomas Barkin commented on the situation in the U.S. economy rather dovishly - signaling that disinflation is continuing and the data may not fully reflect the slowdown already underway.
Fed Barkin
- Anecdotal information, however, points to a greater slowdown than the current data show.
- The economy is moving in the right direction in terms of lowering inflation.
- Longer-term rates have moved up, which has tightened conditions.Rate moves work through financial conditions.
- The recent inflation report was 'only one report', after several good ones. I believe we have a restrictive policy stance.
- I don't know where rates will be in three weeks from now, given what's happening globally. Monetary policy may be influenced by external events, e.g. the situation in the Middle East
- If a recession does come, it is possible that it will be milder than other recent slowdowns.The Fed has time to review the data before its next rate move.
- Wage pressures remain, but have eased overall. Companies are seeing less pricing power, although they are still willing to consider price increases.
- I continue to look for confirmation that the economy is slowing. The path of inflation is not yet clear, but sees clear progress. Changing the inflation target now would lower the Fed's credibility.
EURUSD (H4 Interval)
Looking at EURUSD we can see that price is one step closer to 1,062 level (SMA200) which can be an inflection point and signal of changing the trend. We can see bulilish crossover on SMA50 / SMA100 averages so called 'golden cross' (grey eclipses).
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Source: xStation5
