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Long-term inflation in the United States


[The Fed's interest rate peak will rise to 5.50% in September 2023]

The ISM manufacturing price payment index in the United States recorded 51.3 in February, which was better than expected. The yield of short-term and medium-term treasury bonds in the United States was under pressure, and the spread between the yields of 30-year and 5-year treasury bonds was further flattened. - The wide spread in 10-year Treasury yields has been partially alleviated, and these factors have allowed the Fed swap market to price in September 2023. Peak interest rates rose to 5.50% for the first time.

[Long-term high inflation narrative]

As a series of macro data showed that the U.S. economy is resilient and the labor market is tight, expectations of further declines in inflation were clearly dampened in early 2023. Reinforcing hawkish policy to curb inflation concerns.

[The national unemployment rate in the United States will be 3.6% in 2022]

The U.S. Bureau of Labor Statistics released data on March 1 local time, showing that the national unemployment rate in the U.S. will reach 3.6% in 2022. In 2022, 49 U.S. states and Washington, D.C. saw their average annual unemployment rate decrease, and one state's annual average unemployment rate remained roughly the same.

[Canadian dollar will be difficult to strengthen in the near future]

The Canadian dollar will be in trouble for now. The near-term focus on Canada is likely to be the Bank of Canada's March 8 meeting. The Bank of Canada has signaled a conditional pause in rate hikes, and the market has accepted this signal, with only 2 basis points of rate hikes expected in March and 8 basis points in April. Aside from the BoC rate decision, events affecting USD/CAD will shift to the US and Canadian employment reports on March 10, followed by US CPI on March 14. But all in all, it is difficult to give a particular reason why the Canadian dollar will strengthen in the near future.

[Bailey said that no decision has been made on raising bank interest rates]

Sterling pared gains against the dollar after Bank of England Governor Bailey said no decision had been made on whether to raise bank interest rates further. Bailey cautioned against thinking the central bank is done raising rates or that it will inevitably need to do more. His comments prompted traders to slightly trim bets on a 25 basis point rate hike at the Bank of England's March 23 meeting, but that remains the most likely outcome.

[Real wages in Germany will fall for the third consecutive year in 2022]

German Federal Statistical Office, Germany's real wages will fall by 3.1% in 2022 from the previous year, the third consecutive year of decline, mainly due to rising consumer prices driven by energy and food. The Federal Statistical Office pointed out that although the increase in short-time work led to negative nominal and real wage growth in Germany in 2020, high inflation offset the increase in nominal wages in 2021 and 2022. It is worth noting that in 2022 German nominal wages and real wages will record the largest increase and the largest decrease since 2008, respectively.

[UK house price annual growth has been negative since June 2020]

Robert Gardner, chief economist of Nationwide, the UK's National Building Association, commented that the annual growth of house prices has slipped to a negative value for the first time since June 2020, and house prices fell by 1.1% year-on-year in February. The recent weak house price data began with financial market turmoil sparked by the mini-budget in late September last year. While financial market conditions returned to normal some time ago, housing market activity remains subdued. This likely reflects the ongoing impact on confidence and the cumulative impact of financial stress that has been weighing on households for some time.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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