It’s belaboring the obvious that gasoline (and energy prices) had a big impact on headline inflation [BLS release]. M/m inflation was at Bloomberg consensus of 1.2%, while core was below, at 0.3% vs. consensus 0.5%. However, it’s useful to see how over time exactly how much headline and core diverged.
Statements and Documentation on Russian Actions in Ukraine
From Human Rights Watch (Apr 3): “Ukraine: Apparent War Crimes in Russia-Controlled Areas: Summary Executions, Other Grave Abuses by Russian Forces”.
From Amnesty International (Apr 7): “Ukraine: Russian forces extrajudicially executing civilians in apparent war crimes – new testimony”
From UN Human Rights Monitoring Mission in Ukraine (HRMMU) (March 28): “Mounting civilian deaths, mass destruction and catastrophic humanitarian situation as Russian Federation attacks Ukraine”
Bellingcat has been documenting the application of cluster bombs and artillery strikes against civilian populations.
Gasoline Prices – Looking Forward
Nowcasts for tomorrow’s CPI print is 1.1% m/m (Cleveland Fed), and Bloomberg consensus is 1.2%. In contrast, core CPI nowcast is 0.52%, consensus at 0.5%. The large gap is in large part attributable to gasoline prices, which rose 20% in March (all grades), even though the CPI weight of gasoline is only 3.8%. What do gasoline prices look like in April? This will depend on oil prices.
10yr-3mo Term Spreads and Probit Model Recession Forecasts: Germany, UK, Canada vs. US
For the US, Germany, UK and Canada:
Has the Ten Year Treasury Yield Equaled the Average of Ex Post Future Short Rates Plus a Risk Premium?
And similarly for the Two Year Treasury?
Russian (External) Debt in Doubt
At 40% recovery rate, credit default swaps (CDSs) imply 100% probability of default. Ratings agencies have downgraded Russian debt.
Russia Drops the Policy Rate – What Does It Mean?
The ruble has stabilized at near pre-invasion levels, and the Central Bank of Russia drops the policy rate to 17%. What’s going on?
“High-frequency macroeconomic risk measures in the wake of the war in Ukraine”
In a VoxEU post by Laurent Ferrara, Matteo Mogliani, and Jean-Guillaume Sahuc today, applying a growth-at-risk (GaR) approach (Ferrara et al. 2022, ungated 2020 WP version) they estimate they downside risk to Euro area vs. US GDP q/q growth.
What to Make of the 10yr-2yr and 10yr-3mo Spreads
As is well known, the recession talk has surged in the wake of the (short-lived) inversion in the 10yr-2yr spread.
Recession in 2023?
From Folkerts-Landau and Hooper at Deutsche Bank, yesterday:
…inflation in the US and Europe has now reached levels that have forced the Fed and
the ECB to pivot their monetary policy stances dramatically. As a result, we now
expect the US economy to be in outright recession by late next year, and the EA
in a growth recession in 2024…