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September 19, 2005
Consumer Sentiment Holds A Funeral, And The Fed Funds Probabilities Show Up
Just when you think you got it all figured out. Friday's unseemly jump in reported inflation expectations certainly made a splash in the market for options on federal funds futures. It looks like everyone is convinced the FOMC is much more worried about the inflation part of the report than the possibility that consumers' gloomy assessment of current and future conditions will cause spending to tank:
This is really getting interesting.
Note -- I am sitting in the "business center" of a hotel in Geneva (as in Switzerland) at the moment, and the computer I am using won't, for some reason, let me grab the data from my slides. I'll ask the ever-wonderful Erkin Sahinoz to post the data later today. If you are desperate, here's the Power Point file. You can retrieve the dataset yourself by double-clicking on the graphs.
Download pdf_slides_for_blog_091605.ppt
UPDATE: Erkin comes through.
Download implied_pdf_october_091605.xls
Download implied_pdf_november_091605.xls
September 19, 2005 in Data Releases, Fed Funds Futures, Inflation | Permalink
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Listed below are links to blogs that reference Consumer Sentiment Holds A Funeral, And The Fed Funds Probabilities Show Up:
» Responding to supply shocks from Econbrowser
It seems pretty clear to me that a monetary contraction isn't the appropriate policy response to a supply shock. Apparently there are those within the Federal Reserve who see things differently. [Read More]
Tracked on Sep 25, 2005 5:44:12 PM
» Responding to supply shocks from Econbrowser
It seems pretty clear to me that a monetary contraction isn't the appropriate policy response to a supply shock. Apparently there are those within the Federal Reserve who see things differently. [Read More]
Tracked on Nov 12, 2005 9:11:11 PM
Comments
Posted by:
me |
September 19, 2005 at 11:20 AM
Forget interest rates; I wish I was in Switzerland! Geneva is beautiful (its been almost 10 years since my last trip). The Jungfrau region, Interlaken, and Grindelwald are one of my favorite hiking areas in the World.
Enjoy your trip.
Posted by:
CalculatedRisk |
September 19, 2005 at 12:23 PM
me -- Just to be clear: I recognize that the energy price developments are a bad turn of events. See my comments. I think a post on this is in order -- stay tuned.
CR -- Yeah, its a really beautiful place. Unfortunately -- uh, I mean fortunately -- this is strictly business.
Posted by:
Dave Altig |
September 19, 2005 at 04:04 PM
Dave et al,
I spent several years working with -- and trying to explain -- the Australian consumer sentiment index, which is based on the Michigan index (and which also just had a big fall, interestingly enough).
Lesson 1 is that "sentiment" is much more volatile than habits. Events like Katrina may lead people to expect things to get much worse, but it's not clear how much they actually alter their behavior in response to them.
Certainly a lot of behavior is being altered as a result of high & rising fuel costs, and that could lead to falls in other spending. I agree with the FOMC that the inflation side of the report (core or not) is more of a worry though.
My point is that I don't see the latest sentiment report as signalling a sudden worsening of consumers' inflation or spending outlook. A continuation of a worrying trend though, for sure.
Posted by:
Peter Summers |
September 19, 2005 at 06:03 PM
My trash collection just went from $51 to $57.30 per quarter due to fuel. Now I realize Greenspan says there is not inflation but by my count that is a 12% increase. Oh, silly me, I forgot, that is OIL< related and not in the core so I don't pay it.