page-loading-spinner
Home CPI Triggers Bond Rally, Disclosure Season is Here
Economy
Market Updates

CPI Triggers Bond Rally, Disclosure Season is Here

Bond markets rallied unexpectedly following the CPI release, while disclosure season heats up with pivotal insights into inflation, banking trends, and shifting global confidence in the dollar and gold.

The User's Profile davefairtex January 19, 2025
34
placeholder image

Consumer Economy

Retail Sales (RSAFS); $729B +3.3B (+0.45% m/m)
Industrial Production (INDPRO);  +0.91% m/m
Producer Prices (PPIACO); +0.16% m/m
CPI All Urban (CPIAUCSL); +0.39% m/m

Retail Sales made a new all-time high, and it may be keeping up with inflation. Industrial production jumped higher – but it is not at a new all-time high. Still, the move is a positive sign, and not recessionary.

Producer prices (the old index, not the new one) didn’t change much.  PPI is linked closely to energy.

Lastly, CPI rose 0.39%; annualized, that’s 4.68%. Since all the bureaucrats do is lie, this is an incredibly inflationary signal. Perhaps instead we should focus on “core CPI” (which removes the “useless” food & energy components – who needs them?), which rose just 0.23% this month, or 2.7% annualized.

Wolf’s take here:

Beneath the Skin of CPI Inflation: YoY CPI +2.9%, Worst since July, MoM CPI +0.39% (+4.8% Annualized), Worst since February. Core CPI Stuck for 7th Month at 3.1%-3.3%

(source – wolfstreet)

Wolf doesn’t sound so enthusiastic.  My favorite indicator: “vaxxident” (motor vehicle) insurance, which was up “just” 0.4% m/m, but +11.3% y/y.  Be careful out there.

Credit & Rates

Fed Balance Sheet (WALCL); 6.834T -19.5B (-0.29% w/w)
Total Bank Credit (TOTBKCR); 18.018T +72.18B (+0.40% w/w)
30 Year Mortgage Rate (MORTGAGE30US); 7.04% +11 bp
10 Year Treasury (DGS10); 4.61% -17 bp

We saw a massive expansion in bank credit this week, which hit a new all-time high. This increase erased all the deflationary-looking bank-credit contraction we have seen over the past two months. It’s not a very exciting chart, but if this week’s move happened every week for a year, bank credit would grow by 20.8%.

The 10-year yield (DGS10) fell 17 bp this week.  The DGS10 candle print was bearish, but it has yet to change trend, according to my models.

In spite of the inflationary-looking CPI print, the bond market loved the CPI news; DGS10 shot lower, causing a rally in TLT. 

The rest is exclusive content for members

Curious about what being a member offers? Sign up now for a risk-free trial and get a sneak peek into the premium content, features, and perks awaiting you on the other side.

Community

Top Comment

davefairtex:
And now, with Trump’s inauguration just moments away, it seems that more and more little people, both inside, and out of government, are feeling as...
Anonymous Author by mike-from-jersey
30
Start Here What Do I Do?