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Macro Briefing for Saturday, June 11, 2022

• Treasury Sec. Yellen said that the US will probably avoid a recession.
• The US gasoline price average has been approaching $5 a gallon.
• Rising fuel costs are rippling across industries and affecting consumer behavior.
• China consumer inflation was stable in May as factory-gate prices started to ease.
• The ECB said it will raise interest rates next month.
• An FTC chair issued a regulatory warning to the tech industry.
• Big US banks look set for an earnings boost from the pickup in credit card use.
• US jobless claims rose to a five-month high for the week through June 4.

The US housing market saw the “most significant contraction in activity since 2006,” advised a Freddie Mac economist in a tweet. “It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer. Purchase apps down 40% from seasonally adjusted peak.”

US inflation will stay high but has probably peaked, stated Ellen Hazen, chief market strategist at F.L.Putnam. “Don’t expect inflation to come down anytime soon," she advised.

“We think that inflation has probably peaked and will be declining toward the rest of this year,” she told Yahoo Finance Live. “The reason for that is that companies have a wide variety of different factors leading to inflation. There are higher labor costs. There are higher fuel prices, higher transport and logistics prices, higher commodities prices, and some of these are going to come off, but they won’t come off all at the same time.”

Most Americans expect inflation to worsen, a new poll finds. Two-thirds of Americans think inflation will get worse in the year ahead, while only 21% expect it to get better and 12% see no change on the horizon, according to a recent poll conducted by The Washington Post and George Mason University’s Schar School of Policy and Government.

The world economy should prepare for an ongoing surge in oil prices, analysts predict. Financial Times reported:

“JPMorgan’s chief executive Jamie Dimon thinks oil prices could surge to $175 a barrel later this year. Jeremy Weir, the head of commodity trader Trafigura, says oil could go ‘parabolic.’

"Energy Aspects, a consultancy with clients stretching from hedge funds to state energy companies, says we are facing 'perhaps the most bullish oil market there ever has been.' Goldman Sachs thinks oil prices will 'average' $140 a barrel in the third quarter of this year.”