I understand all the negative-bond chatter today because of the additional pop in the core CPI. Let me remind you that this is classic late cycle. More often than not, core inflation peaks just as the recession starts or after it has already begun.
- US Core CPI (M/M) SA Aug: 0.3% (est 0.2%, prev 0.3%)
- US Core CPI (Y/Y) NSA Aug: 2.4% (est 2.3%, prev 2.2%)
- US CPI (M/M) NA Aug: 0.1% (est 0.1%, prev 0.3%)
- US CPI (Y/Y) NSA Aug: 1.7% (est 1.8%, prev 1.8%)
Fed chair powell should have stuck with his assessment that the decline in inflation was transitory. Core CPI yr/yr up for 3rd straight month to 2.4%, highest level in 11 years.
2.4% YoY core CPI is the highest reading in a decade.
YOY core CPI highest since September 2008, when the Fed should have been hiking.
Core CPI at 2.4% y/o/y is the most in 11 years as sticky services inflation now is joined by higher goods prices. But all I hear everywhere is that there is no inflation. I'm not saying it's high or worried it will be but it's higher than none.
Sorry, but one of the reasons core CPI surprised on the upside was because medical care services rose 0.9% in August, the fastest one-month pace since August 2016. CPI is only out of pocket and PCE covers payments made on behalf of you. PCE healthcare won't be this strong. https://t.co/soISsaxy0v
Quite the tricky past hour for bond traders:
-- QE-infinity (more or less) from Draghi and the ECB
-- Munchin "seriously considering" 50-year Treasury bonds, though seems less enthused about 100-year bonds
-- Core CPI hits 2.4%, highest of the cycle
Big rise in health insurance costs leads core CPI to come in above forecasts. The obvious solution is a higher overnight interest rate target from the Fed. #sarcasm
In fact, core cpi has risen every month since the Fed Chair in May said the decline was transitory.
Inflation might be stirring again just as the Fed is poised to cut interest rates. Core CPI climbs to 13-month high of 2.4% in August. You’d have to go back to 2008 for the next highest reading. Fed will get worried if this keeps up. https://t.co/b17YFxPV2D
Core CPI Y-Y% firming in large part being driven by health care. But this is a material methodological difference between CPI and PCE. CPI only looks at out-of-pocket spending & prices, whereas PCE is broader and includes government public program spending, so less volatile https://t.co/W2Ou2Q5iDU
Core CPI at an 11 year high, unemployment rate at 40 year lows, stocks at all time highs...and the Fed's gotta cut 50bps here to shore up market confidence. We live, indeed, in interesting times.
The US has just recorded its first run of three straight 0.3% core CPI prints since 1995. Treasury yields? Down. 10-year breakevens are less than *half* the current 3-month annualized core inflation rate. This can't end well.
US #CPI +0.1% while core CPI post 3rd consecutive +0.3% m/m in August.
Food flat while energy -1.9% on 3.5% drop in gasoline.
Core driven by shelter +0.2% & medical +0.3%
Headline inflation slips to 1.7% (-0.1ppt) while core #inflation rises to 2.4% (+0.2ppt) to 13 month high https://t.co/92zWZBPARA
Third straight month of 0.3% core CPI.
Also FWIW if #inflation is in the midst of rising further (and I don’t believe it is) remember that prices tend to peak very late in the business cycle. Either way the bond market is looking past the recent pickup in the core CPI
Overall CPI still tepid and decelerating to a 1.7% yr/yr pace in August from a 1.8% pace in July.
Core CPI shows entirely different story. Gains occurred in all categories except new cars - yr/yr pace jumped their mo in a row to 2.4%, hottest reading since Oct 2018.
There are differences of scope, weight, formula between PCE & CPI. Translating the details of core CPI/PPI to PCE, we estimate that core PCE will rise 1.7% year-over-year in August. That gap between core CPI and core PCE is widening to 0.7ppt, about twice its historical average. https://t.co/Bt7n7T76Qw
I understand that YoY core CPI is currently running 0.8pp hotter than the Fed's preferred #inflation gauge (YoY core PCE), but it's tough to characterize inflation as "low" when this index is at an 11-year high.
#USD more mixed than you might expect after #ECB fires bazooka. Fairly hefty attack vs. euro, but downturn vs #USDJPY. That's despite US mth-mth core CPI being only major inflation surprise with +0.3% vs +0.2% est ^KO https://t.co/BlZUBmMZ26
Correction: Jump in Core CPI largest since 2008.
US inflation is picking up. Today's consumer price index data for Aug shows that while headline inflation remained subdued at the headline level (+1.8% year over year), core CPI (a better measure of the trend & outlook) accelerated to +2.4%--an 11yr high! https://t.co/GoYZBlo2gq https://t.co/lIxGLSSwp5
Vitor o core cpi está em 2.3% mas o core do PCE está 1.6% you boa parte da diferença está em housing e medical cadê que estão subindo forte (ambos próx de 3%yoy) e tem mais peso em CPI do que PCE
#inflation update: CPI day, here's a fresh look at the core CPI & Cleveland Fed median CPI amalgam. As to core PCE, the Fed's preferred inflation metric, a picture is worth a 1,000 words? https://t.co/JkE7k68TwJ
People like this have been on repeat "Inflation will likely undershoot" for 2 years now.
Core CPI keeps going up non-stop and now at highest level in 10 years.
Establishment is DEAD WRONG on inflation because it is not convenient. https://t.co/u6DxNmNDoP
Keep a real close eye on option skews, TY puts warming relative to calls (call implied volatility *lower* today despite bullish impulse). ECB QE vs USA core CPI competing cross-currents -> option mkt suggesting hedging latter risk is more urgent. https://t.co/ecUeiKxxjf
Add the full employment and core CPI highest since 11 years. A book case for strong rate cut.