The NY Fed’s Household Survey showed that inflation expectations increased slightly at the 1‐yr and 3‐yr horizons (3.6% to 3.7% and 2.8% to 3%) while decreasing on the 5‐yr term (3% to 2.8%). Median inflation uncertainty increased slightly across all three horizons. Labor market expectations were mixed with unemployment expectations deteriorating and perceived job loss risk improving. Households’ perceptions and expectations for credit conditions deteriorated slightly. The average perceived probability of missing a minimum debt payment over the next three months increased by 1.4 percentage points to 12.5%, the highest reading since May 2020.
The FT reports that Bank of England officials are pushing for tighter liquidity requirement for GBP‐denominated money market funds. Under the recommendations, money market fonds would have to hold up 50% to 60% of their funds in assets that can be liquidated within 7 days compared to 30% currently. The guidance comes as the BoE published its quarterly financial stability statement in which it also warned for material leveraged positions in US Treasuries by hedge funds and the UK households are under pressure from higher living costs with a notable rise in the percentage of households with a high debt burden.
