It seems like there is always something to be concerned about–this week we already have an important data point being released tomorrow in the Consumer Price Index (CPI).
The year over year expectation is for a reading of 8.0% as compared to the last reading of 8.5%. Directionally good, but I don’t think something that will change the Fed from raising the Fed Funds rate by 75 basis points later this month.
The New York Fed just released inflation ‘expectations’ for the next 1 and 3 year periods and they were lowered relatively sharply. The 1 year expectation was lowered to 5.7% from a previous ‘guesstimate’ of 6.2% in July. The 3 year expectation was lowered to 2.8% from the previous 3.2%. Of course no one has successfully forecast month to month levels–let alone 1 and 3 years in the future. The report is here.
Today we have the 10 year treasury yield about flat at 3.31% after being a bit lower earlier in the day–around 3.27%. Obviously awaiting further data tomorrow.
I am seeing very nice gains in the portfolios today–of course all dependent on what we see tomorrow with CPI and then interest rates. A number at expectations is probably not good enough to send rates lower–but a surprise of a lower CPI should set rates on a drafting lower direction. We’ll see–who really knows?