CPI has been basically zero the last few/several months. When we see inflation reports of high single digits, they are showing the year over year inflation surge which appears to have ended 4 to 6 months ago. Yes, I know food prices keep surging, but most other goods categories are no longer showing big increases, and many have shown decreases (gasoline, used cars, lumber, etc.).
What comes next? Well, interest rates are likely staying where they are for short term money for the rest of the year as the most important thing is to make sure inflation is really stamped out. The squeeze on economic activity will continue and that probably means a downdraft in asset prices (cars, houses, stocks, etc.). Hard to believe unemployment won't rise somewhat, although the lack of a lot of spare workers probably limits the rise compared to prior recessions. Depending on how far it goes, it will be possible to see overall deflation, at least for a short period of time.
The bond market is anticipating all of this with medium and long term rates well below short term rates. Look out below.
What comes next? Well, interest rates are likely staying where they are for short term money for the rest of the year as the most important thing is to make sure inflation is really stamped out. The squeeze on economic activity will continue and that probably means a downdraft in asset prices (cars, houses, stocks, etc.). Hard to believe unemployment won't rise somewhat, although the lack of a lot of spare workers probably limits the rise compared to prior recessions. Depending on how far it goes, it will be possible to see overall deflation, at least for a short period of time.
The bond market is anticipating all of this with medium and long term rates well below short term rates. Look out below.
