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Started By
Message
Feb 2023 CPI: 6% (in line with estimates)
Posted on 3/14/23 at 8:50 am
Posted on 3/14/23 at 8:50 am
LINK
Shelter is still spiking (has been up or even every month since Feb 2021) as home sales fall (pushing demand for rent, which then influences the OER bullshite).
Categories
Food has trended downward but it's still so high that's like saying "I lost only one hand instead of both".
The bright spot is that energy continues to drop (coming in lower than CPI), but we're about to get into summer blends and summer demand so expect that to reverse to some extent.
As long as these necessities remain significantly higher than CPI, inflation is going to remain sticky as they are foundational to the economy.
Inflation is still nowhere near 2% but the rate of growth is finally starting to trend downward. While I think a .5 rate increase at the next meeting is off the table, .25 is still a certainty with little chance of a pivot this year (outside of some extraordinary issue).
Shelter is still spiking (has been up or even every month since Feb 2021) as home sales fall (pushing demand for rent, which then influences the OER bullshite).
Categories
Food has trended downward but it's still so high that's like saying "I lost only one hand instead of both".
The bright spot is that energy continues to drop (coming in lower than CPI), but we're about to get into summer blends and summer demand so expect that to reverse to some extent.
As long as these necessities remain significantly higher than CPI, inflation is going to remain sticky as they are foundational to the economy.
Inflation is still nowhere near 2% but the rate of growth is finally starting to trend downward. While I think a .5 rate increase at the next meeting is off the table, .25 is still a certainty with little chance of a pivot this year (outside of some extraordinary issue).
4
Posted on 3/14/23 at 8:54 am to Bard
quote:
25 is still a certainty with little chance of a pivot this year (outside of some extraordinary issue).
The futures market disagrees with you. As of now, there is a 90% chance the federal fund rate is lower at the end of the year.
This was a good CPI print to keep the markets calm. Need another .25 increase to show the markets nobody is going to overreact.
If they pause the rate hikes, markets are going to absolutely RIP before the crash.
Posted on 3/14/23 at 8:57 am to Bard
Here's some help if someone wants it all in one article...
Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago (CNBC)
Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago (CNBC)
quote:
The consumer price index rose 0.4% in February and 6% from a year ago, in line with market expectations.
A drop in energy prices helped keep inflation in check, while shelter costs increased sharply.
The probability that the Fed would raise benchmark interest rates a quarter percentage point next week increased following the report.
quote:
Inflation rose in February but was in line with expectations, likely keeping the Federal Reserve on track for another interest rate hike next week despite recent banking industry turmoil.
The consumer price index increased 0.4% for the month, putting the annual inflation rate at 6%, the Labor Department reported Tuesday. Both readings were exactly in line with Dow Jones estimates.
Excluding volatile food and energy prices, core CPI increased 0.5% in February and 5.5% on a 12-month basis. The monthly reading was slightly ahead of the 0.4% estimate, but the annual level was in line.
Posted on 3/14/23 at 9:13 am to Bard
quote:
Food has trended downward but it's still so high that's like saying "I lost only one hand instead of both".
Kind of like when they rollback the prices on groceries at walmart. Shows their price of chicken being rolled back $1.00 and your supposed to be happy but a year earlier it was 3 dollars cheaper.
Posted on 3/14/23 at 9:35 am to I Love Bama
quote:
The futures market disagrees with you. As of now, there is a 90% chance the federal fund rate is lower at the end of the year.
They've been living on wishcasting throughout this event. Thus far JP has shown an unwillingness to return to pre-COVID weaknesses.
Powell says interest rates are 'likely to be higher' than previously anticipated.
quote:
Those remarks carry two implications: One, that the peak, or terminal, level of the federal funds rate is likely to be higher than the previous indication from the Fed officials, and, two, that the switch last month to a smaller quarter-percentage point increase could be short-lived if inflation data continues to run hot.
In their December estimate, officials pegged the terminal rate at 5.1%. Current market pricing moved higher following Powell’s remarks, to a range of 5.5%-5.75%, according to CME Group data. Powell did not specify how high he thinks rates ultimately will go.
Granted, this was all before today's CPI but how much that data will change Powell's views will likely not be known until the next meeting. I think 5.5% is off the table, but I wouldn't be shocked if ~5% was still the target for December.
Posted on 3/14/23 at 9:41 am to I Love Bama
quote:
If they pause the rate hikes, markets are going to absolutely RIP before the crash.
Spot on. I will be selling calls and buying puts first hour into the trade if this scenario plays out.
Posted on 3/15/23 at 6:27 am to Bard
Shelter is still increasing because rents always lag actual prices. This is mostly due to lease agreements, but also because of the method that BLS uses to estimate these values.
Posted on 3/15/23 at 6:37 am to I Love Bama
quote:
If they pause the rate hikes, markets are going to absolutely RIP before the crash.
quote:
I Love Bama
You’re pretty committed to this “we haven’t seen the bottom yet” scenario. That’s always the trouble with market timing - getting out AND getting in at the right time. Based on your posts on this board, if the S&P goes to 5,000, you’ll be on the sideline because you didn’t think the 20-25% pullback was enough.
Good luck.
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