Here we monitor US inflation monthly dynamics across Headline (CPI), which is a full consumer basket of goods and services, and Core metrics, which exclude volatile components such as energy and food. We also track daily commodity prices which may feed into inflation numbers. Inflation affects central bank interest rate setting, and subsequently equity and bond performance.
CURRENT READINGS
Headline inflation in US currently runs at 4.3% YoY - above target and moving higher - and up by 0.32% since last month. Core inflation is running at 3.0% and falling. Energy prices run at 22.1% YoY, up by 5.23% in the month - high, in the top range of 10-year observations (elevated in historical terms). In parallel, the price of a global basket of commodities is moving up by 25.9% YoY.
MARKET IMPLICATIONS
Realized inflation is moving higher because of an energy/commodity shock, while core remains anchored. Duration in fixed income assets should move lower, while stocks may continue to move up until realized inflation will hit 5.5/6%.
In general terms, inflation is a key variable for investors. Higher expected inflation is bad for bonds, good for commodities and traditional stocks (up to a limit, until it starts destroying consumption). Lower expected inflation is good for bonds and growth stocks.
We observe here realized inflation which has already happened (for market expectations on future prices, go to the breakeven page).