The Consumer Price Index Rose 0.4% Last Month, 0.1%More Than the 0.3% Estimate… The Consumer Price Index (CPI) rose 3.5% for the year.
What it means— Inflation sucks. It seems like just a year or two ago a soda cost $0.79 at the local quick mart; now it’s $1.19. A soda that cost $1.99 at a restaurant is now $2.99, or even more. And don’t start focusing on the prices of oil and steaks.
The latest Consumer Price Index report from the Bureau of Labor Statistics shows beef and veal prices are up 7.7% compared to January 2023 and could be higher this year. More specifically, ground beef is up 5.5%, beef roasts 6.7%, and beef steaks are up 10.7%.
Oil prices are rising due to geopolitical factors and global supply disruption and uncertain demand. OPEC and the IEA have different views of demand for oil. Currently, oil traders are positioning for higher prices.
Then again, most homes appreciated nicely last year and so did equity portfolios. This year is more challenging with mortgage rates hitting 7.34%. Homeowners in San Francisco and Detroit are selling at a loss if they bought during the Covid spike.
The problem is that we got used to nice gains in some areas while not having to pay for them. That’s gone. The Wall Street Journal reported that real average hourly wages were up seven cents over last year and down about 2.5% over the last three years. All of us are paying more; whether we’re better off depends on what we make and what we own.
The uptrend in CPI left bond investors quaking in their boots. After starting the year estimating the Fed would cut rates five or even six times, now investors are hoping for two cuts. We’ll see. Fed Chair Powell has been saying “three cuts in 2024” for a long time, and he has control. If the central bank pushes the first rate cut past June, get ready for rising long rates and more volatility in the equity markets.
Having flirted with lower yields, the bond market is adjusting to higher for longer inflation data. Investors were fewer than expected Thursday for the 30-year Treasury auction which offered one of the highest yields in a decade. But the 10-year Treasury yield eased Friday morning to 4.54%.
March Producer Price Index Eased to 0.2%, Lower than the Expected 0.3%… The U.S. Bureau of Statistics reported that the basket of goods, services, and construction was up 2.1% over the last year.
What it means— This is good news. The 2.1% increase from last year is close to the Fed’s inflation bogie. The metrics aren’t exactly apples to apples, but the Producer Price Index (PPI) directly informs the prices that consumers pay. Yet it was a mere two weeks ago that we were basking in the disinflationary sun of the easing Personal Consumption Expenditures Index (PCE). Sentiment can turn on a data-driven dime.
Reverse Repurchase Operations Fall, but Financial Conditions Ease… The Fed’s Reverse Repurchase Program (RRP) activity fell from the top in 2024 of $2.4 trillion to $440 billion, while the Chicago Fed’s National Financial Conditions Index (NFCI) dropped to the loosest level since January 2022.
What that means— Falling RRP activity means fewer institutions are using that program for liquidity, but the NFCI shows that institutions are getting plenty of cash from elsewhere. The Chicago Fed’s measure includes money markets, debt and equity markets, shadow banks, and commercial banks. With the Fed now talking about the appropriate time to take their collective foot off the brake, it’s clear that the central bankers don’t want to be accused of breaking the economy.
Burger King Drive-Thru Patron Uses Gun To Threaten Worker Giving Him a Discount… Around 9:00 AM on Sunday, Easter morning, Willowick Ohio Police said a patron complained that the food was too cheap. He knew his meal was supposed to cost about $11.00, so the total was wrong. Burger King employee Howard Vernon explained that they were running a special, but the patron really wasn’t buying it. He sped off, only to return to the drive-thru window and point a gun at Vernon. The suspect yelled at Vernon and drove off again; he has not been apprehended.
Data supplied by HS Dent Research
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