Shave a point off the equities indexes as inflation comes in hot. So much for the myth that stocks are a good inflation hedge I guess.
As for CPI, core was 0.36% above the 0.3% expectation, headline was also higher than estimates. Auto related items appeared to drive some of the above consensus reading...good thing no one needs to insure or repair their cars. And the so called “super-core” inflation is looking not only sticky but rising.
As you might have expected it was a tough day to auction 10Y Treasuries, given 10Y yields saw double digit moves higher in yields. The 2Y is nearing 5% at 4.96% and the 10Y is back over 4.50 at 4.54%.
Essentially every headline on the FOMC Minutes started with the words 'uncertainty' and the need for further 'confidence' that the data shows inflation will come back to 2%. The line that some participants warned that inflation "had been relatively broad based and therefore should not be discounted as merely statistical aberrations,"
We'll see what PPI does today.
XTOD: For currency-issuing governments, bonds are a policy choice, not an economic imperative. You can prune the debt tree by leaving reserve balances in the system (as central bank liabilities) instead of forcing them to convert to government bonds (liabilities of Treasury).
https://on.ft.com/3UaSCEa
XTOD: Find myself in a virtually unoccupied middle ground on this issue. Yes, composition of the debt b/w (base) money & bonds is a policy choice. But "monetizing" the debt does not "prune" the debt tree--it simply relabels it (e.g., as interest-bearing reserves in the U.S.) Swapping bonds for interest-bearing money mainly shortens the maturity structure of the outstanding supply of government securities. The total supply of debt (rather than its composition) and its path (relative to demand for this debt) matters more, in my opinion.
XTOD: Can we finally get a mea culpa from Krugman, MMT clique & other transitory truthers?
Would be congratulating themselves like crazy rn if data were good, despite 2 yrs too late.
PISS POOR analysis & forecasting, confidently issued w/ political motives & no actual insight. OWN IT
XTOD: “The 3-month annualized change in supercore inflation is now over 8% and accelerating… The 6-month annualized change is 6%, and the year-over-year change is 5%… We are sticking to our view that the Fed will not cut rates in 2024” Apollo’s Torsten Slok
https://x.com/StephanieKelton/status/1778025062647357738
https://x.com/dandolfa/status/1778041930276041019
https://x.com/Jesse_Livermore/status/1778050504779608131
https://x.com/FerroTV/status/1778094795119907068
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