10Y dollar inflation

CPI Misses Across The Board, Dollar Dives

CPI rose 0.1% vs est. 0.2%, according to the BLS. Ex. food, energy up 0.1% vs est. 0.2%

Well you couldn’t have asked for a more interesting setup for Friday’s CPI print.

Things were already interesting enough with this being just the latest data point that will either confirm or cast doubt on the notion that the labor market is “lying” about the state of the U.S. economy.

As a reminder, this is always – always – about expectations for Fed balance sheet normalization. The data needs to be just cold enough to keep Yellen from getting too aggressive and just warm enough to keep the bottom from falling out of the reflation narrative.

Anything “too good” risks undercutting risk assets as it would suggest the Fed has room to move ahead with normalization and anything “too bad” casts doubt on claims that we’re not headed for a recession.

The headline print was expected to be +0.2% m/m. Whisper number was +0.1%.

As Bloomberg notes, “the past five CPI reports have shown less price pressure than expected and this week’s flight-to-quality gains, even an in- line result may spark a selloff.”

Or maybe not. Because remember: bad news is good news for risk as described above. And again, that’s what makes this so interesting. It’s coming amid a flight-to-safety which means it’s unclear if bad news will actually be good news this time around.

As far as markets are concerned, 10Y yields are sitting at their lowest levels since June amid angst about Trump and Kim:


Here’s the full rundown of estimates and priors:

  • US CPI MoM, est. 0.2%, prior 0.0%
  • US CPI Ex Food and Energy MoM, est. 0.2%, prior 0.1%
  • US CPI YoY, est. 1.8%, prior 1.6%
  • US CPI Ex Food and Energy YoY, est. 1.7%, prior 1.7%
  • US CPI Core Index SA, est. 252, prior 251.6
  • US CPI Index NSA, est. 244.9, prior 245
  • Real Avg Weekly Earnings YoY, prior 1.09%
  • Real Avg Hourly Earning YoY, prior 0.8%

And here, without further ado, are the numbers, just out:

  • U.S. July CPI Rose 0.1%, Below Est.
  • CPI rose 0.1% vs est. 0.2%, according to the BLS.


  • Forecast range from up 0.1% to up 0.3% from 77 estimates
  • Ex. food, energy up 0.1% vs est. 0.2%
  • CPI y/y rose 1.7% vs est. 1.8%


  • CPI NSA index level at 244.786

That, ladies and gentlemen, is a miss across the board. And the result is swift in the dollar….


….and in yields, which spiked and then dove..



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