It’s inflation week in the US and you know what that means: Disgruntled Americans will learn that annual consumer price growth ran far faster in October than the Fed’s (arbitrarily-defined) conception of tolerable.
The joke (there are actually several of them) writes itself here: Thanks to the sort of existential political dysfunction that cost the country its top-tier credit rating, Americans actually won’t learn how far above the Fed’s target consumer price growth was in October. Not this week, and not ever.
Last year’s government shutdown — which Russ “The Reaper” Vought will proudly remind you was the longest in American history — means the BLS won’t be able to compute a YoY print for the CPI indexes this week.
But that’s ok, because Americans don’t need any statistics agency to tell them annual inflation’s running too fast. They can surmise it from their grocery receipts and pump prices. And markets don’t care about the YoY print, only the MoM readout, which the BLS can and will provide for October.
As the figure shows, core’s seen at 0.2%. Again. If economists are finally right, October’s pace will mark a deceleration from September and August, when one of the metrics Kevin Warsh is supposedly committed to corralling came in far above consensus.
With a barnburner headline hiring print and an AHE overshoot in hand, you’d think another warm core CPI readout would seal the deal on a December Fed hike. But there’s a long time (and another jobs report) between now and this year’s final FOMC meeting, and in my judgment, Warsh would be more than willing to eschew a hike in the event equities are 10% lower from here and/or credit spreads appreciably wider.
You could argue the midterm results amounts to a public endorsement of the Fed’s inflation-fighting mandate and thereby that Warsh now has some latitude to buck Trump, but… well, authoritarians, “would-be” or otherwise, have a tendency to double down where they still have sway when they get a rebuke elsewhere.
The US data docket’s mostly empty other than CPI (Tuesday) and PPI (Friday). The New York Fed will release the latest installment of its consumer poll on Monday (that’s a third-tier release at best) and the NAR will probably say existing home sales fell meaningfully last month when the association tallies closings for October on Thursday. Wednesday’s a bond market holiday.
