Transitory or Not??

Well we saw very hot inflation numbers coming from the Producer Price Index (PPI), but markets tend to overlook the PPI and focus on the Consume Price Index (CPI) which will be released tomorrow.

You can see that January had a month over month increase of 1.3%, February .5% and March 1% which translated into year over year inflation of 1.7%, 2.8% and 4.2%–wow these are HOT.

Now we didn’t really see any reaction from interest rates to these hot numbers–the question being will they translate into higher consumer prices?

Then–if these hot PPI numbers start translating into higher consumer prices will markets react?

The Federal Reserve has already stated point blank they believe any inflation will be ‘transitory’ (i.e. fairly temporary) so they have no ability to react to any hot inflation numbers for many months–will markets react? I suspect we will see minimal reaction whether the CPI is hot or not.

We will have any answer in about 20 hours.

2 thoughts on “Transitory or Not??”

  1. “Since 1990, the lag between the start of a recession and the bond yield trough jumped to 76 months. The economic fundamentals currently at work suggest that long lags will be a feature in the cycle ahead. While no two cycles are ever alike, the trend in long bond yields remains downward.” –excerpted from the Hoisington Qtrly Review, 1stQ 2021
    https://hoisington.com/economic_overview.html

    No wonder I can’t find any illiquid bargains now. lol

    1. Camroc,
      Thanks for posting info from Hoisington Mgt. I first learned of Van Hoisington in the 1970s and early 1980s on Wall Street Week with Louis Rukeyser. Mr. Hoisington is a very good student of economic history and trying to understand the inner workings of various parts of the economy. While no one always gets it right, I think he’s one of the best.

      RB

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