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Historic Inventory Continued In March, But Is It All Price Illusion, Too?

By |2022-04-27T19:41:56-04:00April 27th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Census Bureau today released its advanced estimates for March trade. These include, among other accounts like imports and exports, preliminary results reported by retailers and wholesalers. That means, for our purposes, inventories. Oh my, was there ever more inventory. It was, apparently, widely expected that following an avalanche of goods building up over the previous five months the situation [...]

Not Good Goods

By |2022-04-18T17:56:44-04:00April 18th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The goods economy in the United States is – maybe was - the lone economic bright spot. That in and of itself should’ve provoked more caution, instead there was the red-hot recovery to sell under the cover of supply shock pricing changes. The sheer spending on goods, and how they arrived, each unabashedly artificial from the get-go.Combine those two factors, [...]

You Know What They Say About The Light At The End Of The Tunnel

By |2022-04-12T17:30:54-04:00April 12th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In any year when gasoline prices rise 18%, that’s not going to be good for anyone except maybe oil companies who extract its key ingredient from out of the ground (or don’t, as the case can be). Yet, annual rates of increase that size do happen. After August 2017 up to and including August 2018, the BLS’s CPI registered a [...]

China More and More Beyond ‘Inflation’

By |2022-04-11T20:13:16-04:00April 11th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

If only the rest of the world could have such problems. Chinese consumer prices were flat from February 2022 to March, even though gasoline and energy costs predictably skyrocketed. According to China’s NBS, gas was up 7.2% month-over-month while diesel costs on average gained 7.8%. Balancing those were the prices for main food staples, especially pork, the latter having declined [...]

Consumer Prices And The Historical Pain(s)

By |2022-03-10T20:23:03-05:00March 10th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The 1947-48 experience was truly painful, maybe even terrifying. The US and Europe had just come out of a decade when the worst deflationary consequences were so widespread that the period immediately following quickly erupted into the worst conflagration in human history. Then, suddenly, consumer prices skyrocketed and it left many Americans wondering if there would ever be an end [...]

Odd Curve Shapes, or More Chinese Than Russian

By |2022-03-09T19:55:39-05:00March 9th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

This is a truly weird shape for the US Treasury curve to find for itself. Really steep up front, seriously upward sloping consistent with the Fed’s stated rate hike intentions (which influence short-term rates most directly up to around the 2-year note). From there on down, though, it’s flat. As in pancake, almost. I can’t recall a time when the [...]

What Does She Mean, Worse?

By |2022-02-24T20:06:53-05:00February 24th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

At issue is what she or they mean when the use the qualifier “worse.” It may be that how policymakers are thinking about it ends up being very different from reality or bond market discounting. No surprise, these two camps have frequently been at odds and for a very long time; Alan Greenspan’s “conundrum” a full seventeen years ago this [...]

Are Central Bankers About To Spike The Ball At The 30-yard line (again)?

By |2022-02-22T18:50:50-05:00February 22nd, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Nobody, and I mean nobody, does premature celebrations like central bankers. When it comes to their non-money monetary policies and the inflation they seek to create from them, time and again officials in every jurisdiction spike the ball at least 30 yards before they reach the endzone. Whenever one or another consumer price measure ticks up, or accelerates dramatically as [...]

An October (‘inflation’) Revolution

By |2022-02-16T20:25:23-05:00February 16th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Most Americans understandably have tunnel vision when it comes to the American CPI and what it might portend for their personal circumstances. Gasoline prices and those for anyone trying to buy a car or now rent some kind of shelter, the threat is immediate. From this palpable sense, the word “transitory” today might just seem offensive.Yet, it may prove itself [...]

Federal Reserve’s Own Inflation Expectations Surveys More Agree w/Euro$ Futures Inversion Than Rate Hikes

By |2022-02-14T19:14:27-05:00February 14th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The FOMC is going to hike rates maybe even aggressively. There’s not much dispute on this assumption. Why the Committee might be doing so, that’s a whole detailed debate. The Treasury yield curve is building toward inversion while the crucial (and leading) Euro$ futures curve is already substantially upside down.Both are increasingly confident market bets against the FOMC’s position(s).Jay Powell [...]

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