Fed’s Dilemma – Hotter Inflation & a Cooling Economy + Why Inflation is so Hateful

Inflation was the main concern of markets this week. On Tuesday (March 12th) Consumer Prices (CPI) came in slightly hot, but within market expectations. As a result, the financial markets took the report in stride and equities rallied. The problem was Thursday’s Producer Price Index (PPI), an index that is a leading indicator of future […]

Headline Data Look “Strong,” But Contradictions Abound

The January Non-Farm Payroll (NFP) number was always destined to be a market mover, especially after Fed Chair Powell said that, while the Fed will be lowering rates in 2024, March was not their base case. The +353K NFP number (consensus was +185K) with December’s number revised up to 333K from 216K, and the +0.6% […]

Fed Actions (Inactions) are Key to the Economic Outlook

Over the past week or so, we’ve seen some backup in market interest rates. The 10-Year Treasury yield (chart) closed at a 4.15% on Friday (January 19), up 21 basis points from its 3.94% level a week earlier, and 3.79% on December 26th. The rise in market rates was mainly due to the hawkish tone […]

As Inflation Recedes, Will the Fed Act in Time?

The CPI for December was slightly hotter than expected, up +0.3% from November (which in turn only rose +0.1%). The market expectation was for a +0.2% number. As a result, the headline CPI, which looks back 12 months, kicked up to 3.3% in December from November’s 3.1% read. The Core CPI (ex-food and energy), however, […]