The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in December on a seasonally adjusted basis, after increasing 0.1 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.5 percent before
seasonal adjustment.
The index for gasoline was by far the largest contributor to the monthly all items decrease, more than offsetting increases in shelter indexes. The food index increased 0.3 percent over the month with the food at home index rising 0.2 percent. The energy index decreased 4.5 percent over the month as the gasoline index declined; other major energy component indexes increased over the month.
The index for all items less food and energy rose 0.3 percent in December, after rising 0.2 percent in November. Indexes which increased in December include the shelter, household furnishings and operations, motor vehicle insurance, recreation, and apparel indexes. The indexes for used cars and trucks, and airline fares were among those that decreased over the month.
The all items index increased 6.5 percent for the 12 months ending December; this was the smallest 12-month increase since the period ending October 2021. The all items less food and energy index rose
5.7 percent over the last 12 months. The energy index increased 7.3 percent for the 12 months ending December, and the food index increased 10.4 percent over the last year; all of these increases were
smaller than for the 12-month period ending November.
Bull or Bear?
Bulls will underline evident deflation. Bears will underline the core's recovery.
Overall, this fits perfectly with the temporary goldilocks concept, where growth is currently acceptable and inflation is being temporarily restrained.
And, aside from extreme crises, this report saw the most disinflationary impulse in this category, with energy contracting 4.5% m/m.
The core of this report contains some indications of a broad-based uptick. Core commodities are becoming less deflationary. Shelter levels have returned to highs. Ex-shelter services are increasing.
The CPI report includes a lot of nonsense too. When we remove some of that stuff and focus on the most labor-intensive services, the picture remains stable at high levels. Not as clean as the PCE 6m services change, but appropriate.
Used car prices fell 2.5% for the month, slightly less than the previous month.
In terms of CPI, used cars are still about 25% more expensive than new cars. But, before we all expect these declines to continue, it's worth noting that the Manheim index has recently stabilized. This could be a taming disinflationary impulse.
CPI - shelter is still the big contributor but other indicators show rents declining.
Initial claims at 205k. Continuing claims ticking down to 1.63mln . Labor market is *getting better* on a short-term basis.
Here's the chart of continuing claims. After a bit of a rise late last year, there has been a stabilization. Remember the absolute level is also low - pre-covid continuing claims were around 2mln when the UE rate was in the 3%s.
CME futures signaling a probability of a 25bp hike at the February 1 FOMC meeting has risen to more than 92% - 73% probability of another 25bp hike in March, and then... 54% probability of a *pause*
It is becoming confusing? Some data suggest a bullish market, but other data indicate that interest rate cuts may not occur soon and rates may even go higher than expected, hovering around 6%.
Regardless, this market cycle is different from the past and it's crucial to identify assets that will perform well during inflation.
Multiple domestic and global factors influence inflation, including the job market, housing market, supply chains, and geopolitical tensions. Before making a decision next month, the Federal Reserve will consider December data on the personal consumption expenditures price index. Despite expectations of moderation this year, it is not expected to reach the 2% target until 2025.
Furthermore, the employment cost index for the fourth quarter, which is released at the start of the Fed's two-day meeting, will be considered.
CPI REPORT BULL OR BEAR?
CPI REPORT BULL OR BEAR?
CPI REPORT BULL OR BEAR?
Hey guys CPI data was released today. GREAT JOY?
Bull or Bear?
Bulls will underline evident deflation. Bears will underline the core's recovery.
Overall, this fits perfectly with the temporary goldilocks concept, where growth is currently acceptable and inflation is being temporarily restrained.
And, aside from extreme crises, this report saw the most disinflationary impulse in this category, with energy contracting 4.5% m/m.
The core of this report contains some indications of a broad-based uptick. Core commodities are becoming less deflationary. Shelter levels have returned to highs. Ex-shelter services are increasing.
The CPI report includes a lot of nonsense too. When we remove some of that stuff and focus on the most labor-intensive services, the picture remains stable at high levels. Not as clean as the PCE 6m services change, but appropriate.
Used car prices fell 2.5% for the month, slightly less than the previous month.
In terms of CPI, used cars are still about 25% more expensive than new cars. But, before we all expect these declines to continue, it's worth noting that the Manheim index has recently stabilized. This could be a taming disinflationary impulse.
CPI - shelter is still the big contributor but other indicators show rents declining.
Initial claims at 205k. Continuing claims ticking down to 1.63mln . Labor market is *getting better* on a short-term basis.
Here's the chart of continuing claims. After a bit of a rise late last year, there has been a stabilization. Remember the absolute level is also low - pre-covid continuing claims were around 2mln when the UE rate was in the 3%s.
CME futures signaling a probability of a 25bp hike at the February 1 FOMC meeting has risen to more than 92% - 73% probability of another 25bp hike in March, and then... 54% probability of a *pause*
It is becoming confusing? Some data suggest a bullish market, but other data indicate that interest rate cuts may not occur soon and rates may even go higher than expected, hovering around 6%.
Regardless, this market cycle is different from the past and it's crucial to identify assets that will perform well during inflation.
Multiple domestic and global factors influence inflation, including the job market, housing market, supply chains, and geopolitical tensions. Before making a decision next month, the Federal Reserve will consider December data on the personal consumption expenditures price index. Despite expectations of moderation this year, it is not expected to reach the 2% target until 2025.
Furthermore, the employment cost index for the fourth quarter, which is released at the start of the Fed's two-day meeting, will be considered.
Keep in Touch
Share