Wednesday, November 14, 2018

October 2018 CPI

Shelter inflation had another moderate month, bringing the trailing 12 month shelter inflation rate down a little.

Core CPI still running just over 2% and core CPI excluding shelter still running at about 1.4%.  Still in tight but not problematic territory.


  1. Housing looks to cool off in closed access cities. The way the CPI is constructed, not sure how this will be measured. But in general. the Fed has more than met its goal is controlling inflation, outside of housing.



    1. Seems like some indicators are turning, but I have to admit, I got on this train a little early.

  3. Seems like some indicators are turning, but I have to admit, I got on this train a little early--KE

    Maybe. Seems to me you were properly concerned, and not predicting doom, and even presently you are not predicting doom. To be sure, the US and global economy may have only hit an air pocket. Maybe better news is ahead and I certainly hope so.

    Worth noting, the PBOC and the BoJ are not retreating. The Fed and ECB are.

    I am worried that one argument is gaining traction, just as it did in the Great Depression explanations: That Smoot-Hawley did it.

    I am no fan of greater trade barriers. But this argument seems designed to obscure the role played by tight money in provoking and sustaining the Great Depression, and is being brushed-up for service today. "Trump's tariffs will cause a recession (and not the Fed or ECB)."

    We will see if the financial sector can withstand a downturn in real estate this time around. I am fairly sure the Fed will not react in time. The ECB I know less. The PBOC and BoJ seems more growth oriented.

  4. Frm Moody's

    Unprecedented Amount of Baa-Grade Bonds Menaces the Credit

    Greater uncertainty surrounding the sustainability of corporate earnings growth has adversely affected the performance of medium- and lower-grade corporate bonds. For example, the spread over Treasuries of a composite speculative-grade bond yield quickly swelled from November 8’s 371 basis points to November 14’s 415 basis points. Moreover, November 14’s composite speculative-grade bond yield of 7.12% soared higher by 111 basis points from a year earlier.

    In addition, the long-term Baa industrial company bond yield spread closed at 202 basis points on
    November 14. Not since September 2016 has the long-term Baa industrial spread remained above 200 basis points on a recurring basis. If fears over the adequacy of future corporate earnings persist, the upside for benchmark U.S. interest rates is probably well under consensus expectations.

    Industrial Commodity Prices Sink as World Business Activity Slows
    As long as the dollar exchange rate does not weaken appreciably and inflation expectations are well contained, the FOMC very much has the option of normalizing monetary policy at a more measured pace. Yes, the FOMC will probably hike fed funds’ midpoint to 2.375% at its December 19 meeting. However, December 19’s policy statement might indicate the Fed’s willingness to take a more gradual approach to policy normalization in deference to slumping industrial commodity prices, weakness abroad, and the continued containment of inflation expectations.

    Oil is not the only industrial commodity whose price has sunk in response to the lackluster pace of global business activity. Thus far in November, Moody’s industrial metals price index has dropped by 11% year over year....


    One thing has changed in the last 10 years. I think there was a time when everybody always on Financial Planet had to call for tighter money to be known as a serious person. This time around I am seeing some "serious people" saying maybe the Fed should lay low.

  5. There are some interesting points in time in this article but I don’t know if I see all of them center to heart. There is some validity but I will take hold opinion until I look into it further. Good article, thanks and we want more! Added to Feed Burner as well.
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