Figure 2: Month-on-month inflation of core CPI (blue), chained core CPI (brown), sticky price core CPI inflation (green), personal usage expense core deflator inflation (black), all in decimal form (i.e., 0.05 means 5%). Chained CPI seasonally adjusted utilizing geometric Census X13 (brown). NBER defined economic downturn dates (peak-to-trough) shaded gray. Source: BLS, BEA, NBER, and authors computations.
The CME Fed Watch tool sets indicated Fed funds rate to be set tomorrow at 4.27%, below 4.44% yesterday, while that for the February 1st meeting below 4.82% to 4.76%, both recommending a flatter Fed funds trajectory than before the CPI release.
The 2s10s spread increased (ended up being less unfavorable), while the 3m10s dropped somewhat– so some steepening at the 2 to 10 year of the spectrum. The 5 year Treasury-TIPS breakeven fell 4 bps.
Chained CPI seasonally adjusted utilizing geometric Census X13 (brown). Source: BLS, BEA, NBER, and authors calculations.
Below consensus, heading m/m at 0.1% vs. 0.3% Bloomberg consensus, and core 0.2% vs. 0.3% agreement. Heading and core m/m annualized inflation in Figures 1 and 2, in addition to chained, sticky rate, trimmed, and PCE.
.
Chained CPI seasonally changed utilizing geometric Census X13 (brown).
Figure 3: 10yr-3mo Treasury spread (blue, left scale), 10yr-2yr spread (red, left scale), and 5yr Treasury-TIPS breakeven (green, ideal scale), all in %. Source: Treasury via FRED, authors calculations.
CEA conversation here
Figure 1: Month-on-month inflation of CPI (blue), chained CPI (brown), 16% cut CPI inflation (red), sticky cost CPI inflation (green), personal usage expenditure deflator inflation (black), all in decimal kind (i.e., 0.05 methods 5%). Chained CPI seasonally changed utilizing geometric Census X13 (brown). NBER specified recession dates (peak-to-trough) shaded gray. Source: BLS, BEA, NBER, and authors calculations.
