Halister News

(Bloomberg) -- Following are forecasts for today’s economic releases as compiled by Bloomberg News.

• Initial Claims 245k; range 225k to 255k (46 estimates)
• Cont. Claims 1950k; range 1920k to 1952k (9 estimates)
• The prior report showed jobless claims rose by 4,000 in the week ended June 24 to 248,000
• Claims could move higher as anecdotes point to larger- than-usual number of furloughs during the auto industry’s annual retooling process; for now, claims “are far from disconcerting levels": Bloomberg Intelligence
• PPI 0% m/m; range -0.2% to 0.2% (63 estimates)
• Core PPI 0.2% m/m; range -0.1% to 0.3% (53 estimates)
• Ex trade PPI 0.2% m/m; range 0.1% to 0.2% (8 estimates)
• PPI 1.9% y/y; range 1.7% to 2.3% (24 estimates)
• Core PPI 2% y/y; range 1.8% to 2.1% (21 estimates)
• A gradual rise in core PPI “suggests some mounting, albeit slight, pipeline inflation”: Bloomberg Intelligence
• In May, headline PPI was unchanged while core PPI rose 0.3 percent

To contact the reporters on this story: Alex Tanzi in Washington at atanzi@bloomberg.net; Vincent Del Giudice in Denver at vdelgiudice@bloomberg.net To contact the editors responsible for this story: Alex Tanzi at atanzi@bloomberg.net Kristy Scheuble

(Bloomberg) -- Bio-Rad Labs initiated with an outperform rating and PT $250 at Well Fargo, with analyst Tim Evans seeing significant margin expansion opportunities.

• Other initiations:
  • TECH market perform, PT $110; says co. has favorable exposure to pharma and a consumables-heavy revenue profile that allows high margins
  • DHR market perform, PT $90; the Cepheid acquisition suggests a renewed focus on clinical diagnostics markets, which we don’t view as favorably as the pharma-focused strategies of certain peers
  • PKI market perform, PT $72; sees some interesting opportunities in emerging markets
• Upgrades A, PT $67; and MTD, PT $660
• Downgrades BRKR to underperform, PT $25
• Sees opportunity in tools from the pharma or the clinical end market (23% and 32% of sector revenue, respectively), which are both expected to exceed GDP growth rates over the next few years; says pharma has enduring structural advantages over clinical

To contact the reporter on this story: Tatiana Darie in New York at tdarie1@bloomberg.net To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net Brad Olesen

(Bloomberg) -- Latest comments from Yellen and Brainard underscore the likelihood of a lower terminal rate for the current Fed tightening cycle and probably below the long-term dot-plot rate of 3%, keeping nominal yields in check over the medium term, Bloomberg strategist Tanvir Sandhu writes.

• Fed tightening into falling realized inflation is weighing on terminal rates with historically limited policy headroom for the next recession
  • U.S. 2y1m -- a proxy for the Fed’s terminal rate - - has fallen this year to 1.86% along with breakeven rates, having required fiscal-policy expectations to play out to push neutral real rates (r*) away from zero
• A fall in inflation expectations lowers terminal rates via lower implied policy rates; with neutral real rate remaining sticky at 0%, Fed inflation target of 2% implies policy rate of 2% which gets pressured lower as inflation expectations fall
• Clearly, Fed knows financial conditions are too easy and wants some volatility to return but in turn would suppress inflation expectations, keeping nominal rates contained even as real rates rise
• Yellen signaled that the neutral rate of interest is very near the current fed funds rate, which is slightly dovish for the longer run outlook and increases the likelihood of a lower terminal rate for this tightening cycle
• This also cemented Brainard’s remarks a day before, which saw rates rally following the signal that there isn’t much more work to get to neutral rates with the neutral real fed funds likely to remain near zero
• Any significant rally in implieds and richening of payer skews in a rates selloff may be seen as an opportunity to fade, which also may be structured on a cross-market basis with Treasuries likely to outperform global core bonds
• Given the low levels of volatility and the binary economic outlook, three-month curve spread straddles may perform if either business-cycle pessimism deepens or outlook improves; risks are that vols continue to crush lower and rates remain stuck, see more here
• NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

To contact the reporter on this story: Tanvir Sandhu in London at tsandhu17@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Anil Varma