Halister News

(Bloomberg) -- Inflation “party” has started, with core PCE expected to rise to 1.9% by end of 2017, “approaching if not overshooting the Fed’s 2% inflation target,” according to BofA researchers led by Candace Browning.

• Market’s expectation for Fed hikes in coming years “has sufficient room to increase relative to the current projections”
  • “With long-term inflation break-evens closing on their historical averages, we think the next phase of the rates move will be led by the belly of the curve and real interest rates”
• Monetary easing is giving way to fiscal easing; “history of populism is one of fiscal largesse”
• Nominal U.S. growth could rise to 4% from 3%
  • While slower growth is expected in 1H, there should be pickup in 2H after fiscal stimulus measures kick in
• Europe “didn’t get an invitation” to inflation party, which started elsewhere in the world
• During presentation in New York Wednesday, BofA economist Michelle Meyer said she expects Fed to hike once in 2017, three times in 2018
• Strategist Mark Cabana said Trump may have “outsized influence on remaking the Fed” by potentially nominating as many as six governors
  • He can fill two seats quickly, “with an eye on one of them replacing Chair Yellen”; then he may have to fill Tarullo’s seat if he resigns, as well as Fischer and Yellen in 2018