I came across a few charts last week that I thought were worth sharing.
The one that really stood out to me was from Hajime Kitano at JP Morgan. It shows that the Fed’s estimate for the unemployment rate as of January 2010 has been right on point. The problem is, after a minor tick up in the UE rate at the beginning of 2011 the Fed shifted their estimates to a far more bearish stance and are now drastically overestimating the rate for the next two years. With a breakeven rate of unemployment around 400k on claims as I have been advocating on twitter this disconnect looks to be further exacerbated in coming months.
BNP elaborates on this point by looking at the unemployment rate against claims as well as employment growth versus the JOLTS which also points toward continued improvement.
Related in the Fed policy pasture, inflationary pressures are pointing to the upside as well as illustrated by Citi’s Macro team and their take on long term breakeven inflation rates.
Credit Suisse shows the lag currently seen between loan growth and the yield on the bond.
Unrelated but mentioned as it is a position that I have on (long USDJPY vols) Nomura points out the USDJPY is right around intervention level.
Far from my area of expertise, but worth mentioning as it seems to be flying under the radar BAML on bond flows. This past week saw the largest inflows into non US high yield, and EM bonds of all time.
Last one is something I am still amazed more sell side guys are not picking up on is the STOXX Europe 600 versus the Citigroup Economic Surprise Index for the Eurozone. Which make the case for further strength in European risk assets.
Make of them what you will.