economy Markets

Inflation Comes In Hot For Second Month As Markets Appraise Fed’s Policy Shift

You might recall that core inflation rose the most since 1991 in July, an anomalous print for the anomalous times in which we live and trade. The market is still dealing with pandemic distortions as evidenced by unprecedented volatility in the MoM core series, which isn't exactly known for being the wild EKG it's been over the past six months. March, April, and May, for example, marked an unprecedented three-month streak in negative territory, setting up June's bounce and July's surge. With that in mind, both core and headline inflation came in ahead of expectations for August. CPI rose 0.4% MoM and 1.3% YoY. The core prints are 0.4% and 1.7%. All of these figures are hotter than expected. You'll note that the MoM core print is double consensus, which was looking for a 0.2% gain. July's print was triple estimates. Apparently, used cars were the main "culprit", if that's the right word. "The sharp rise in the index for used cars and trucks accounted for over 40% of the increase; the indexes for shelter, recreation, household furnishings and operations, apparel, motor vehicle insurance, and airline fares also rose", the BLS said. Indexes for education and personal care were
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4 comments on “Inflation Comes In Hot For Second Month As Markets Appraise Fed’s Policy Shift

  1. derek says:

    More COVID impact = many people trying to buy a used car to avoid taking public transportation.

    Economists based outside the US are probably unaware of this phenomenon.

  2. runamok says:

    Interesting. I’m going to chalk this up to the pandemic. The concensus of the big brains I follow is that around the second quarter of the first half of 2021 is when to expect to see the inflation readings that are a result of the monetary actions. Deflationary pressures until then.

    That said, it’s great to have this reading and I hope you have a post like this each month after these numbers come out. It may be a trade of a lifetime coming up. If it materializes and one gets it right, make the trade and sit tight.

  3. John Banjo says:

    what’s behind the rise in airfares? … is it because the number of flights overall have been reduced so dramatically that the ones left are more expensive…?

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