The Inflation Battle Is Far From Over, Now The Hard Part Begins

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The Inflation Battle Is Far From Over, Now The Hard Part Begins

Seekingalpha2023-07-13

The CPI data showed that the non-seasonally adjusted headline inflation rose 3.0% over the past 12 months vs. estimates of 3.1%. The big surprise was the core inflation reading, which reached 4.8%, vs...

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CapybaraNDU
·2023-07-13
Good try, once again
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Lusitanian
·2023-07-13
It's going to be like The Weimar Republic without the Transformative Art .
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The big surprise was the core inflation reading, which reached 4.8%, vs...</p>\n\n<a href=\"https://seekingalpha.com/article/4616668-the-inflation-battle-is-far-from-over-now-the-hard-part-begins\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".DJI","symbol_name":"道琼斯","start_time":0,"source_url":"https://seekingalpha.com/article/4616668-the-inflation-battle-is-far-from-over-now-the-hard-part-begins","article_id":"2351546103","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2351546103","pubTimestamp":1689262193,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The CPI data showed that the non-seasonally adjusted headline inflation rose 3.0% over the past 12 months vs. estimates of 3.1%. The big surprise was the core inflation reading, which reached 4.8%, vs","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".DJI":"道琼斯",".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index"},"translate_title":"通货膨胀之战远未结束，现在艰难的部分开始了","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".IXIC":1.1,".SPX":1.1,".DJI":0.85},"content_text":"The CPI data showed that the non-seasonally adjusted headline inflation rose 3.0% over the past 12 months vs. estimates of 3.1%. The big surprise was the core inflation reading, which reached 4.8%, vs. analysts looking for an increase of 5.0%.On the surface, the easy part of the inflation cycle appears to have been completed, but where inflation goes from here will be open to debate. The core measure of inflation is undoubtedly better than where they were, but the Fed isn't likely to take much comfort in one month of better data. Core goods and services are still relatively high, even after modest improvement.Core services for June were up 6.1% on a y/y basis, and goods were still up 1.3%. Both are still much higher than the historical average from 2000 until the beginning of 2020, when services averaged 2.8%, and goods averaged around 0%.BloombergOverall, the core CPI of 4.8% was the lowest reading since the fall of 2021 and, indeed, has fallen quite a bit from its high of 6.6% in September. But again, it has been a slow long road, and disinflation isn't the same as deflation. Disinflation means prices are rising slower; deflation means prices are falling. Core CPI still needs to lose another 2.8 percentage points from here to get back to levels it was before the pandemic began.BloombergThe CPI non-seasonally adjusted rose by 0.3% in June and was in line with data in May. When looking at the trend of the non-seasonally adjusted number, it has increased by 3% over the past 12 months, an annualized 5.7% over the past six months, and annualized 4.5% over the past three months. To finish the year with a 3% number, the non-seasonally adjusted index would have to move sideways for the year's balance. It would need to see a repeat of what happened in the second half of 2022. Again, I think it's just more to the point that the challenges for inflation become more complicated from here.BloombergIt will put into question the fantasy the stock market has had now for some time that inflation is just going to vanish and melt away. The CPI swaps market suggests that the CPI inflation y/y rises in July to around 3.2% and then 3.4% in August.BloombergOver the past six months, CPI swaps have re-rated the inflation rate higher, with values for July rising from 2.3% to 2.4% for August and making inflation a tricky and challenging measure to forecast, even for the market.BloombergThe Cleveland Fed, which has had a history of overstating the CPI, suggests headline inflation of 3.35% in July and 4.9% for core CPI. But again, it provides us with data points indicating the disinflation trend gets bumpier and less consistent as we move forward.BloombergIt's tough to understand how the market interoperates data on the day of because of positioning, which may have been looking for core CPI data that came in higher than expected. But initially, the dollar index is falling very hard, and the two-year rate is falling by 12 bps, while equities are rising. But it will be essential to watch how the dollar and rates continue to trade and, more importantly, whether crucial support levels are held.Additionally, it will be essential to monitor the spreads for rates because currently, with the two-year rate falling more than the 10-year rate, it has allowed the distance between the 10- and the two-year rate to rise to -88 bps. This spread had hit a low of -110 basis points on July 3. A steeper yield curve can send many messages, from a strengthening economy to one of recession, depending on how the curve steepens.BloombergYes, it's very good to see that headline inflation is falling, but it's also clear that it may get a bit more confusing and complex from this point forward, and based on the data, the hard part for the markets is likely only beginning.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":197428641800232,"gmtCreate":1689240506824,"gmtModify":1689240510059,"author":{"id":"4091449914273180","authorId":"4091449914273180","name":"CapybaraNDU","avatar":"https://static.itradeup.com/news/45f43895513a14a93d9fef520100f642","vip":1,"hat":"https://static.tigerbbs.com/f84d87792f02cf78e80ee34979fd31e5","crmLevel":5,"crmLevelSwitch":1,"idStr":"4091449914273180","authorIdStr":"4091449914273180"},"htmlText":"Good try, once again&nbsp;","listText":"Good try, once again&nbsp;","text":"Good try, once again","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":12,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/197428641800232","repostId":2351546103,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":197428268855296,"gmtCreate":1689240411846,"gmtModify":1689240508962,"author":{"id":"4138742080171092","authorId":"4138742080171092","name":"Lusitanian","avatar":"https://community-static.tradeup.com/news/ba9a7af4e5f91cb22fbdb26303730ddf","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4138742080171092","authorIdStr":"4138742080171092"},"htmlText":"It's going to be like The&nbsp;Weimar Republic without the Transformative&nbsp;Art .&nbsp;","listText":"It's going to be like The&nbsp;Weimar Republic without the Transformative&nbsp;Art .&nbsp;","text":"It's going to be like The Weimar Republic without the Transformative Art .","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":10,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/197428268855296","repostId":2351546103,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":58,"commentSize":2,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}