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Inflation Watch A mid-month focus on inflation via Traditional Indexes, Commodity Prices, and Labor Costs

Sep 11 2020

Fed Looking To Make Up Lost Time

  • Sep 11, 2020

CPI figures beat expectations but inflation remains below desired levels.The Fed’s change to an average inflation target means a higher desired range. Government spending and depressed consumer confidence highlight our Inflation Scorecard.


Aug 13 2020

Reflation Strengthening

  • Aug 13, 2020

The CPI numbers beat expectations again. The reflation theme is supported by a weaker U.S. dollar and lower real yields. Our inflation scorecard is also consistent with a reflation story.


Jul 15 2020

Reflation Green Shoots Multiply

  • Jul 15, 2020

The non-seasonally adjusted headline CPI rose 0.6% (y/y) in June, a bit stronger than market estimates. The Core CPI maintained its 1.2% annual pace (Chart 1), which is also a tad stronger than the market expectations. There was very little market reaction  to these new numbers since investors have learned to look through these numbers after COVID-19 and the latest numbers are not enough to impact any policy directions in the near term.


Jun 10 2020

Some Green Shoots Of Reflation?

  • Jun 10, 2020

May’s month over month CPI results missed expectations but rebounded from April’s plunge. Deflation is still on the table but several indicators have bounced off their lows. Inflation results are less meaningful as large segments of the Index are inaccessible to consumers.

May 13 2020

COVID-19 Impact Showing Up In Inflation

  • May 13, 2020

The CPI numbers missed expectations. COVID-19 is the divide between inflation winners vs losers. Our inflation scorecard continues to point to lower inflation and it’s driven by a demand shock. Lower capacity utilization and money velocity also indicate a disinflationary trend ahead.


Apr 14 2020

Inflation Takes A Backseat

  • Apr 14, 2020

The CPI numbers missed expectations. The segments most affected by COVID-19 were the biggest detractors. The market isn’t too concerned about weak inflation at this point, because there are much bigger issues at present, such as liquidity and financial conditions.

Mar 12 2020

Saved By Zero (Fed Funds)?

  • Mar 12, 2020

February’s “Coronavirus Free” CPI data came in a tick hotter than expected. The massive downdraft in risk assets will be extraordinarily deflationary and we question whether the Fed can ride to the rescue once again.


Feb 14 2020

Inflation In-Line & Scorecard Neutral

  • Feb 14, 2020

Where inflation goes next will be primarily determined by the probability of a recession.

Jan 14 2020

Fed Keeping Both Feet On The Wheel

  • Jan 14, 2020

Headline and Core CPIs both post slower than expected gains in their month-over-month figures. The Fed’s laissez-faire attitude for 2020 seems appropriate for now. Interesting movements in commodity indexes may signal future upward price pressure.


Dec 13 2019

Inflation Porridge Is Just Right

  • Dec 13, 2019

Wednesday's report contained no datapoints that might sway Fed policy. After three cuts in 2019 and a restart of quantitative easing, a recession that felt almost imminent at the beginning of the year seems to have been avoided.

Nov 13 2019

Inflation In-Line & Scorecard Neutral

  • Nov 13, 2019

 The CPI numbers are largely in line with consensus. Where inflation goes next will be primarily determined by the probability of a recession. A near-neutral inflation scorecard is consistent with our slowdown but no recession view.

Oct 11 2019

Inflation—Not Much To See

  • Oct 11, 2019

The Core CPI is in line with consensus. The recent string of weak economic numbers has increased the odds of an imminent recession. A currency pact with China would serve to cap the upside in the dollar and may even help weaken it, providing support to inflation.

Sep 12 2019

Reaching A Crossroads

  • Sep 12, 2019

The Core CPI registered its highest YOY increase of the past year. However, a recent NY Fed survey and other inflation forecasts seems to point to softening expectations. During Fed easing regimes, the CPI has been a good indicator of how aggressive the Fed needs to be. The next few months will be critical in assessing our economic situation.


Aug 13 2019

Inflation Slightly Better Than Expected

  • Aug 13, 2019

The Core CPI is slightly ahead of consensus. Recent depreciation in the Chinese Yuan is disinflationary. Given the seasonal tendency for better economic numbers in the second half of the year, inflation would likely rise moderately along with the economy once we turn the corner.

Jul 12 2019

Core CPI Slightly Better Than Expected

  • Jul 12, 2019

The headline CPI numbers are in line while Core CPI is slightly ahead of consensus. Higher tariffs are not showing through import prices yet. Global slowdown underpins recent inflation path.


Jun 13 2019

May Inflation—Dude, Where’s My Rate Cut?

  • Jun 13, 2019

The latest batch of softer than expected inflation figures gives the Fed more cover for a rate cut. Consumer inflation expectations are now the lowest in two years. Housing price increases remain critical to overall inflation.


May 13 2019

April Inflation—A Sideshow To Trade Talk

  • May 13, 2019

The latest CPI numbers are slightly lower than market expectations. Oil prices need to be watched closely as further oil weakness would likely drag down inflation expectations too. Concerns about new tariffs causing higher inflation are misplaced.


Apr 11 2019

Inflation Remain Contained

  • Apr 11, 2019

The latest CPI numbers are largely in line with market expectations. The recent rebound in oil prices certainly helped the recovery in inflation expectations. Recent U.S. economic numbers have been decent overall and the latest uptick in the U.S. ISM index also offers support for inflation.


Mar 12 2019

Don’t Hold Your Breath On Inflation

  • Mar 12, 2019

The latest CPI numbers were slight misses and at the bottom end of their contemporary ranges. The recent rally of risk assets might be the only tail wind we can find for future inflation. The stark difference in durable and non-durable goods inflation is an excellent study in globalization.


Feb 14 2019

Inflation Stable

  • Feb 14, 2019

The latest CPI numbers are largely in line with market expectations. The Fed pause and other central bank easing moves are positive for risk markets. Watch cyclicals/defensive relative performance and ISM for near term direction.