UNITED STATES   So, CPI inflation was low again in July. Not a surprise; but after an extended period, an indication that the low readings are more than quirks in the data. The minutes of the July FOMC (out this week on Wednesday) will recall this, by now, seemingly never-ending debate. The market, responding to last week’s CPI data, and to growing geopolitical risk, dialed-back their expected FOMC response. And, in this regard, because they are backward-looking, pre-dating the events, the minutes will add little. We must wait for the September meeting. Most likely, there will be an announcement about the start of balance-sheet tapering. The FOMC believes that the contractionary impact of this measure will be, by design, negligible. Thus, more interesting will be the new set of FOMC forecasts. Will members revise their 2018 rate forecasts down?  Will the 2/10 spread flatten? We are not certain the forecasts will change materially. Even if there is a reassessment about low inflation, a recognition that it is as much a product of tepid demand as it is of idiosyncratic elements in the index, there is nothing in the data, so far, that points to a structurally lower level of inflation at full employment. What the data suggest, instead, is a longer lead-time between changes in demand and their impact on … Continue reading US + Brazil Financial News (8/14)