S&P 500
April 27 : 1357
May 26 : 1325.69
June 22 : 1287.14
June 30 : 1320.64
Treasuries
2 year
April 27: 0.64
May 26 : 0.48
June 22 : 0.36
June 30 : 0.45
10 Year
April 27 : 3.35
May 26 : 3.06
June 22 : 2.96
June 30 : 3.15
30 Year
April 27 : 4.45
May 26 : 4.22
June 22 : 4.19
June 30 : 4.36
Inflation Expectations
2 year inflation swaps
April 27 : 2.65
May 26 : 2.12
June 22 : 1.83
June 30 : 1.84
5 Year TIPS Breakeven rate
April 27 : 2.35
May 26 : 2.07
June 22 : 1.89
June 30 : 2.03
10 Year TIPS spread
April 27 : 2.60
May 26 : 2.34
June 22 : 2.24
June 30 : 2.48
30 Year TIPS spread
April 27 : 2.68
May 26 : 2.47
June 22 : 2.39
June 30 : 2.65
Bloomberg Commodity Index
April 27 : 1766.98
May 26 : 1684.28
June 22 : 1665.53
June 30 : 1667.7
EUR USD
April 27 : 1.4738
May 26 : 1.4129
June 22 : 1.4268
June 30 : 1.4496(Data from bloomberg.com)
The potential resolution of the Greece crisis pushed markets in a positive direction this week. European debt problems could have potentially caused a flight from Euros into Dollars and since a higher demand for dollars could only have been offset by a larger supply, this would have required fed action... and we know how hesitant they are to act at a 0% fed funds rate.
If the economy can avoid any negative shocks the Fed might be able to get by without actions stimulus, but the recovery will likely continue at a "frustratingly slow pace" (to borrow a phrase from Bernanke) unless the Fed becomes willing to "put up with" higher NGDP growth.
One could put a positive spin on current events by pointing out that inflation pressures are non-existent and another commodity boom seems unlikely (given that the "boom" last year really just returned prices to pre-crisis levels). Year over year inflation should fall and it will be harder for inflation hawks to argue for tighter money under this scenario.
The problem with that argument is that the Fed already knows these things and still can't agree that money is too tight. The Fed has also shown how eager it is to tighten if things get even marginally better. I hope I'm wrong.
If the economy can avoid any negative shocks the Fed might be able to get by without actions stimulus, but the recovery will likely continue at a "frustratingly slow pace" (to borrow a phrase from Bernanke) unless the Fed becomes willing to "put up with" higher NGDP growth.
One could put a positive spin on current events by pointing out that inflation pressures are non-existent and another commodity boom seems unlikely (given that the "boom" last year really just returned prices to pre-crisis levels). Year over year inflation should fall and it will be harder for inflation hawks to argue for tighter money under this scenario.
The problem with that argument is that the Fed already knows these things and still can't agree that money is too tight. The Fed has also shown how eager it is to tighten if things get even marginally better. I hope I'm wrong.
