Breakevens at 1.89 the market now expects the Fed to undershoot its own 2% target. And the funds rate is still sitting at 3.5-3.75%. Thats a real rate near 1.75% against the Feds own ~1.1% real neutral → and every tick lower in expectations tightens policy further
Breakevens at 1.89: Fed expected to undershoot 2% Read More »
Inflation, simplest definition: money growing faster than what the economy produces. More currency chasing the same output → prices rise. That’s it. Not greed, not gas prices, not bad luck. The ratio of money to output. Two ways to fight it. Shrink the numerator → tighten, the painful way. Or grow the denominator → produce
What is Inflation? Read More »
CPI COOLER Down 0.4% M/M 3.5% Y/Y May CPI printed 4.2% and the market priced a September hike at 75%. June CPI just fell 0.4% on the month → the biggest monthly decline since April 2020. Headline down to 3.5%. Core flat for the month, 2.6% annually.
CPI cooler: down 0.4% M/M to 3.5% Y/Y Read More »
May CPI printed 4.2% and the market priced a September hike at 75%. June CPI just fell 0.4% on the monththe biggest monthly decline since April 2020. Headline inflation dropped to 3.5% year over year. Core was flat for the month and 2.6% annually. That is not a minor miss. It changes the policy path
CPI Cooler: The Inflation Shock Is Easing Read More »
Three weeks ago the market priced 70% hike odds off a 172K blowout jobs print. That number no longer exists. May was just revised to 129K. June came in at 57K versus 114K expected. The blowout was a World Cup hospitality one-off: roughly 70K jobs in leisure against a 14K trend. Strip the distortion and
The World Cup hiring distortion just expired Read More »
A month ago this was the take when the market priced 70% hike odds off a 172K blowout. That number was just revised to 129K. June printed 57K. The World Cup ONE-OFF artifact expired, exactly on schedule. Trend now reads 178K → 115K 129K 57K. The framework didn’t get lucky. It read the composition while
World Cup one-off artifact expired on schedule Read More »
Bank of America is calling for three rate hikes by year-end. The data says that call is wrong. Core CPI is up just 0.2% month over month. Core PPI is below consensus. One-year breakevens are 1.698%, down 25.78% year to date. The oil curve is moving into contango, which says supply shock rather than persistent
Bank of America Is Wrong About Three Rate Hikes Read More »
Welcome to June! June opens on a split screen. $SPY and $QQQ GREENnear record highs. $DIA and $IWM RED. Oil ripping ~7% on Iran, $VIXY ticking up, $GLD & BITCOIN selling off. The index level looks calm. Underneath, capital is ROTATING hard – energy bid, small
June opens on a split screen Read More »
The Federal Reserve is getting a cleaner signal on inflation than the headline debate suggests. Kevin Warsh has indicated a preference for trimmed-mean measures over core PCE alone, and that matters because the trimmed mean strips out the most extreme monthly price moves. The practical takeaway is not that inflation has disappeared. It is that
Trimmed Mean Inflation Gives the Fed More Room to Cut Read More »
Fed Chairman Kevin Warsh wants to pay more attention to inflation measures that strip out the most extreme price moves each month. Several versions exist, all running below core. The most widely cited is the Dallas Feds trimmed mean, at 2.3% in April versus 3.3% for core PCE. That distinction matters: if the Fed emphasizes
Warsh’s Trimmed-Mean Inflation Lens Could Keep Rates Lower Read More »
