* 10-year Treasury (DGS10): +13 bp to 4.30%.
* 30 Year Mortage Rate (MORTGAGE30US): +16 bp to 6.77%.
* Fed Balance Sheet (WALCL): +2.6B (+0.03% w/w).
* Total Bank Credit (TOTBKCR): -16.5B (-0.1% w/w). Contraction.
* Consumer Price Index (CPIAUCSL): +0.3% m/m, core-services +0.66% m/m. Inflation returning.
* Producer Price Index (PPIACO): +0.48% m/m, consumer services +1.0% m/m. Inflation returning.
Both CPI (Tuesday) and PPI (Thursday) were two big market-drivers this week. Substantial inflation is coming back, in spite of the “inflation suppression” psyop employed by the US government. Wolf has the details:
Beneath the Skin of CPI Inflation, January: Powell’s Gonna Have a Cow when he Sees the Spike in “Core Services” Inflation [Feb 13] (source – wolfstreet); ““Core services” CPI jumped by 0.66% in January from December, or by 8.2% annualized (blue). In this inflation cycle, only three months were worse (April, June, and September 2022).”
Top % increase this month – sorted. Multiply by 12 to annualize:
+ Hotels, motels, etc. 1.8%
+ Motor vehicle insurance 1.4%
+ Airline fares, other public transportation 1.3%
+ Postage & delivery services 1.2%
+ Water, sewer, trash collection services 1.1%
+ Other personal services (dry-cleaning, haircuts, legal services…) 1.0%
+ Motor vehicle maintenance & repair 0.8%
+ Medical care services & insurance 0.7%
PPI Inflation Spikes in Services and Finished Core Goods, Very Disconcerting (source – wolfstreet); “Final demand services weigh 62.3% in the overall PPI. The surge in the services PPI was driven by a big jump in its biggest component: “Finished consumer services less trade, transportation, and warehousing,” accounting for 32.9% of PPI. It spiked by +1.0% month-to-month or 12.7% annualized.”
This is a big jump in two inflation indicators – for both producers and consumers. What’s the common thread? Services. Most “services” areas require healthy, in-person labor – you can’t “work-from-home” (while semi-disabled) in these jobs. My guess as to the root cause of the ongoing worker shortage: something Safe and Effective that was mandated on the labor force. It appears that the inflationary effects of the worker-injuring mandate remains in place, regardless of “rate increases.” Turns out, Fed rate increases do not heal mandate-disabled workers. Who knew?
Note – my server is offline right now, so I’m going back to using charts from Stockcharts.com, which really does provide a great product for those that want to see what prices are doing (I’m not affiliated).