德银-美股-宏观经济-美联储观察员：核心通胀数据支撑2018年四大方面上涨-20171204-6页_625kb

Fed Watcher: Evidence of Firming Core Inflation Support Four Hikes in 2018

Summary

This document, titled Fed Watcher: Evidence of Firming Core Inflation Support Four Hikes in 2018, provides an analysis of the Federal Reserve's monetary policy outlook in early 2017. The report highlights the evolving stance of the Fed regarding inflation and interest rates, suggesting a shift in expectations for the number of rate hikes in 2018 and 2019. The key message is that while the Fed did not provide significant new information during recent testimonies, there are signs that core inflation may be picking up, supporting a more hawkish policy stance.

Core Content

• Inflation Trends: There are more convincing signs of inflation rising in recent months, particularly in core components, which are less volatile than energy or food prices.
• Wireless Services Drag: Core PCE inflation remains low on a year-over-year basis, largely due to the deflationary impact of wireless services.
• Policy Outlook: The report updates the expected number of rate hikes from the Fed:
  • A rate hike in December 2017.
  • Four hikes in 2018 (up from three previously).
  • Three hikes in 2019 (down from four previously).
  • The terminal rate (long-term interest rate target) remains unchanged.

Key Takeaways from Fed Officials

• Powell: The case for a December rate hike is coming together, but the labor market is not overheating, and financial rules are considered sufficient.
• Dudley: Not concerned about inflation being slightly below 2%, but acknowledges the potential impact of tax cuts on the policy outlook.
• Yellen: Provided little new information in her testimony.
• Harker: Uncertain about the timing of future rate hikes, with concerns about the rate of change in inflation.
• Kaplan: Believes it is wise to take the next rate hike soon.
• Mester: A flatter yield curve is not a reason to slow rate hikes; the long-run nominal neutral rate is estimated at 3%.
• Bullard: The tax plan may help boost capital expenditures and productivity, but asset valuations are a bigger issue in 2018. An inverted yield curve is seen as a bearish sign.

Events to Watch

• No major events are scheduled for the current week.

Analyst Certification

• The views expressed in the report reflect the personal opinions of the lead analysts.
• The analysts are not compensated for specific recommendations or views in this report.

Important Disclosures

• Research Independence: The Deutsche Bank Research Department operates independently of other business divisions.
• Conflicts of Interest: Analysts may have different views from those in the report, and Deutsche Bank may trade in securities it covers.
• Risk Factors: The report includes important risk disclosures related to fixed-income, derivative, and foreign exchange instruments. These include market, counterparty, and FX risks, as well as the potential for losses due to leverage and changes in macroeconomic conditions.
• Regulatory Compliance: The report is subject to various regulatory requirements in different jurisdictions, including the US, Germany, UK, Japan, India, South Africa, Singapore, UAE, and others.
• Legal Disclaimer: Deutsche Bank does not act as a financial adviser, and the information is provided for informational purposes only. Investors are advised to make independent decisions and consult with legal and financial experts.

Additional Information

• The report is prepared by Deutsche Bank AG or its affiliates.
• It does not take into account the specific investment objectives, financial situations, or needs of individual clients.
• The information is subject to change without notice, and Deutsche Bank has no obligation to update it.
• The report may not be reproduced, distributed, or published without prior written consent from Deutsche Bank.