Halister News

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

• ISM Non-Manu 56.5; range 55.5 to 57.6 (72 estimates)
• • "Watch the prices component; it fell more than eight points to 49.2 in May, the first contractionary reading and its lowest level since February 2016": Bloomberg Intelligence
  • In May, the index fell to 56.9 in May

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(Bloomberg) -- Decline in inflation expectations globally reflects “too much focus on oil” given that “inflation newsflow has been rather resilient” over past couple of months, SocGen strategists led by Alain Bokobza say in note.

• Reflation will maintain support from “inflation prints converging towards target,” GDP growth “finally turning around” in developed and EM countries, and gradual monetary policy tightening, with “more fiscal support pushing real yields up”
• “We think it is rather irrational that long-term market based inflation expectations are so correlated with the oil price when they should be reflecting the long-term trends rather than short-term volatility”
  • Oil stabilizing around $45-$50 “would allow assets to trade back in line with fundamentals”
• SocGen has short-duration bias medium term expecting return of “some optionality for the Fed and the ECB” that restores term premium and inflation risk premium; end-2017 forecasts are 2.70% for UST 10Y yield, 0.70% for German 10Y
• Equities, on the other hand, appear unconcerned about inflation outlook, as dividend yield spread “is still attractive”
• Prospect of higher rates and steeper curve should continue to drive rotation into short-duration sectors of equity markets; once completed, stock-picking should become primary driver of performance; meantime, euro-zone equities, more heavily weighted in short-duration sectors, are preferable to U.S.

To contact the reporter on this story: Anna Windemuth in New York at awindemuth1@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Elizabeth Stanton