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What We Are Following in the News
A new indicator—the Inflation Shock Momentum Index—can help identify emerging inflationary or disinflationary pressures in real time. The index tracks the shares of consumer spending categories that are experiencing consecutive positive or negative monthly inflation shocks, allowing detection of shifts in the underlying inflation environment. The index improves inflation forecasts at one-year to three-year horizons and responds to macroeconomic shocks in line with accepted theory. Recent index readings have fluctuated above and below zero, indicating that inflation may remain near current levels in the near to medium term. https://buff.ly/xGavY5W
Emerging-market traders are turning to currencies from the euro to the Australian dollar to fund bets in the developing world as the US dollar strengthens. Money managers are relying less on the dollar to fund positions in higher-yielding currencies, with some using the euro, Canadian dollar, and yen as funding currencies instead. Investors are growing more cautious about the risks surrounding using the dollar as a funding currency, with a stronger greenback replacing geopolitical risks as the top concern for emerging markets. https://buff.ly/nyy2jxn
Large investors are committing billions of dollars to private credit funds as big institutions seek to profit from an exodus of smaller retail clients. These “closed-end” funds underwrite loans to companies without a bank acting as an intermediary. They had the strongest second quarter for four years, according to new data. https://buff.ly/9Glp1MY
Thoughts on the Latest Economic News