Thursday, October 12, 2017
Danger! Synchronized Swimming
“The economic expansion is about as synchronized as it gets.” – Michael Gapen, Barclays Capital Chief US Economist
Picking up on some thoughts in our last note (see Here), tomorrow’s CPI report should continue the trend higher, as the dollar’s year-over-year performance trend has closely led the CPI data (expressed here through the 10-year real yield), which would point towards further advances– notwithstanding the impacts from this summer’s devastating hurricane season. Although the dollar index has bounced since the early September low – and a “hot” report might rekindle the retracement move higher in the immediate term, we expect the cyclical shift lower that began this year to once again exert itself and take the next leg down.