Friday, April 27, 2007
In Curb Your Enthusiasm, Larry David often finds himself in trouble when he shrugs his shoulders and makes a noncomital noise when asked his opinion on something. Were he a finanical market economist, Macro Man suspects that he'd be making that noise in response to the GDP figs.
Spending was strong, but everything else was pretty tepid. The only real notable feature of the data was the high print on the deflator, which registered 4.0% q/q saar, the highest reading since the original George Bush was in the White House. The core PCE delfator was up 2.2%.
While bonds have taken their cues from the price data, this may be something of a headfake. Energy was the prime contributor to price gains, and the government deflator was 5.9%- recalling memories of the $500 wrenches purchased by the military during the Reagan years. However, bootstrapping the core PCE data suggests that the y/y rate for March (released on Monday) will be 2.1%- lower than expected and close to the Fed's comfort zone. Macro Man will therefore sit tight with his long bond position, though he may look to pitch it in the mid 108's.
UPDATE: So blah was this report, and inded the aftermath, that Macro Man neglected that your all time-high in EUR/USD is now 1.3684. The silence, however, is deafening. The slow-motion crash continues apace....