- Retail Sales (RSAFS): -747m (-0.11%) m/m. Contraction – especially bad going into the holidays.
- Industrial Production (INDPRO): -0.63% m/m. Contraction.
- Producer Prices (PPIACO): -1.32% m/m. Strong contraction; likely due to falling energy prices.
- Consumer Price Index (CPIAUCSL): +0.04% m/m. Flat.
- Total Bank Credit (TOTBKCR): +1.6B (+0.01%) w/w. Flat = Deflationary.
- 30 Year Mortgage (MORTGAGE30US): 7.44% (-6 bp) w/w.
- Fed Balance Sheet (WALCL): -45B (-0.58%) w/w. Seriously deflationary.
- Strategic Petroleum Reserve (WCSSTUS1): Unchanged. No refills for 6 weeks now.
The CPI report (released Tuesday at 08:30) was the big market-moving event this week. Allegedly, inflation is now gone, and deflation seems to be becoming more of a thing. The CPI release smashed the buck into confetti, dropping DX -1.51% just on Tuesday alone. Also on Tuesday, the 10-year yield fell 19 bp, silver rose 0.77, gold climbed 16.30, and SPX rallied 1.91%. Markets appear to be saying: “rate increases are over.”
Wolf Richter has a nice breakdown about the CPI. He still doesn’t appear to know why we have this “bafflingly” high services inflation, but he does provide lots of good data about the larger picture:
Beneath the Skin of CPI Inflation (Source – wolfstreet);
Energy prices plunged, durable goods prices (cars, electronics, furniture, etc.) dropped, food prices rose moderately, as some food prices dropped and meat prices jumped, according to the Consumer Price Index data released today by the Bureau of Labor Statistics.
But the action was in services, and has been for a long time. The CPI for Rent inflation – actual rents that tenants are paying – re-accelerated for the third month in a row, motor vehicle insurance spiked, lots of services jumped, but airline fares, rental cars, and some other services fell.
I’m gonna cherry-pick the bad bits: rent/primary residence (+0.5% m/m), motor vehicle insurance (+1.9% m/m), beef (+1.2% m/m), fats (+2.3% m/m), baby formula (+1.0% m/m). Multiply by 12 to annualize those numbers. Conclusion: don’t have a vaxxident, don’t eat meat or do stir-fry, and do NOT have a baby.
by kdenesen