The Fed on Financial Vulnerabilities

The Fed's list of financial vulnerability concerns is growing

Highlights

• The Fed's list of financial vulnerability concerns is growing

• Hot Tokyo CPI print boosts the yen through ¥150

• Look beyond the imputed price guesswork, and inflation is not “sticky”

• Round trip in the 10-year T-note brings yields back below pre-election levels

Key Takeaways

Yen Strengthens on Strong Tokyo CPI

· The Japanese yen was the big market mover overnight — strengthening through ¥150, and moving above the 50- and 200-day moving averages, after a stronger than expected Tokyo CPI print in November (+2.2%).

Germany Faces Rising Economic Strains

· Economic woes in Germany continue to show through via “excess capacity” and receding inflationary pressures. The Harmonized Index of Consumer Prices deflated -0.7% MoM in November, bringing the year-over-year trend down to +2.4% YoY.