No. Nobody Cares About January’s ‘Hot’ Inflation Prints

And here's why...

"CPI prints high but does anyone care?", wondered Bloomberg's Cameron Crise who, unless I'm just getting the wrong impression, is not a fan of mine. For what it's worth, the answer is no. Nobody cares that CPI printed 2.5% on the headline, the highest since October of 2018. Core for January was 2.3%, hotter than the expected 2.2%, and nobody cares about that either. There are several reasons nobody is particularly interested in this right now. First, the virus scare means any upward pressure on yields from hotter-than-expected CPI prints would be muted anyway, as the safe-haven bid and attendant growth concerns make 2% on 10s appear as an imposing, Everest-like peak, unreachable in the near-term. Second, the data has become less relevant. The Fed has obviously gone out of its way to parrot the "good place" characterization of monetary policy, and beneath that (thin) veneer of confidence is an asymmetric reaction function skewed heavily towards dovishness. The bar for more cuts is infinitely lower than the bar for hikes, and the whole purpose of the Fed's policy rethink is to conjure credibility on the inflation front. Overshoots are welcome. "The market response to the CPI
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1 comment on “No. Nobody Cares About January’s ‘Hot’ Inflation Prints

  1. Anonymous says:

    Don’t care at your peril.

    No one cares until they care………..

    Imagine if in 3-6 months we are talking about high 2s prints. NO ONE thinks that is possible. If everyone is of one mindset watch out.

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