Below consensus, headline m/m is 0.1% vs Bloomberg consensus 0.3%, core 0.2% vs 0.3% consensus. Headline and core m/m annualized inflation in Figures 1 and 2, as well as chained, sticky prices, cuts, and PCE.
figure 1: Month-on-month CPI inflation (blue), month-on-month CPI (brown), 16% adjusted CPI inflation (red), sticky price CPI inflation (green), personal consumption expenditures deflator inflation (black), all in decimal form (ie , 0.05 means 5%). Chained CPI seasonally adjusted using Geometric Census X13 (brown). Recession dates (peaks and valleys) shaded of gray as defined by NBER. Sources: BLS, BEA, NBER and authors’ calculations.
figure 2: Core CPI month-on-month inflation (blue), month-on-month core CPI (brown), sticky price core CPI inflation (green), personal consumption expenditures core deflator inflation (black), all in decimal form (ie 0.05 means 5%). Chained CPI seasonally adjusted using Geometric Census X13 (brown). Recession dates (peaks and valleys) shaded of gray as defined by NBER. Sources: BLS, BEA, NBER and authors’ calculations.
This CME FedWatch Toolset The implied fed funds rate will be set at 4.27% tomorrow, down from 4.44% yesterday, while the fed funds rate at the Feb. 1 meeting was cut to 4.76% from 4.82%, both suggesting that the fed funds rate trajectory is stronger than the CPI Flatter before release.
Spreads increased (became less negative) in the 2s10s, while in the 3m10s they fell slightly – thus somewhat steeper in the 2 to 10 year range. The 5-Year Treasury-TIPS breakeven fell 4 bps.
image 3: 10-3 Month Treasury Spread (blue, left scale), 10-Year to 2-Year Spread (red, left scale), and 5-Year Treasury-TIPS Breakeven (green, right scale), all expressed as percentages . Source: Treasury via FRED, author’s calculations.
CEA discussion here.
