The CPI posted some stellar numbers, but the bond market yawns.
Bloomberg Consensus vs BLS Actual
- CPI Consensus M/M +0.1 Percent, Actual -0.1 Percent
- CPI Core Consensus M/M +0.3 Percent, Actual +0.1 Percent
- CPI Consensus Y/Y +2.6 Percent, Actual +2.4 Percent
- CPI Core Consensus Y/Y +3.0 Percent, Actual +2.8 Percent
M/M is month-over-month and Y/Y is year-over-year. Core CPI excludes food and energy.
The BLS CPI from was better by 0.2 percentage points across the board vs the Bloomberg Econoday consensus estimates.
CPI Month-Over-Month Details
- The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent on a seasonally adjusted basis in March, after rising 0.2 percent in February
- The index for shelter rose 0.2 percent in February, but rent was up 0.3 percent and Owner’s Equivalent Rent (OER) was up 0.4 percent.
- The index for energy fell 2.4 percent in March, as a 6.3-percent decline in the index for gasoline more than offset increases in the indexes for electricity and natural gas.
- The food index, rose 0.4 percent in March as the food at home index increased 0.5 percent and the food away from home index rose 0.4 percent over the month.
- The index for all items less food and energy rose 0.1 percent.
- Indexes that increased over the month include personal care, medical care, education, apparel, and new vehicles. The indexes for airline fares, motor vehicle insurance, used cars and trucks, and recreation were among the major indexes that decreased in March.
Primary rent and food are two of the biggest aggravations. They were up 0.3 percent and 0.4 percent respectively. Food at home was up 0.5 percent.
The details suggest much of the improvement is a drop in the price of gasoline.
Spotlight Shelter, Energy, Medical
Shelter was only up 0.2 percent with OER up 0.4 percent and rent of primary residence up 0.3 percent.
I did some calculations on shelter rounded to two decimal places. Unadjusted shelter was up 0.34 percent. Seasonally-adjusted shelter was up 0.22 percent.
Shelter is 35.389 percent of the CPI. Energy, down 2.4 percent is 6.329 of the CPI.
Energy services (electricity and natural gas) rose 1.6 percent.
Medical Services which play a bigger role in the PCE price index than the CPI rose 0.5 percent.
The more one digs the less great this report looks even though it was much better than expected.
I am not saying this was a bad report, just that it is not as good as it looks at first glance.
CPI Year-Over-Year Percent Change
CPI Year-Over-Year Numbers
- CPI: 2.4 Percent
- Core CPI: 2.8 Percent
- Food and Beverage: 2.9 Percent
- Rent: 4.0 Percent
- OER: 4.4 Percent
Next month we have a neutral number to beat for year-over-year comparisons. Then we have 3 consecutive very difficult months to beat.
Don’t be surprised by rising year-over-year numbers in June, July, and August.
30-Year Bond Market Reaction
10-Year Bond Market Reaction
What Is the Bond Market Worry?
I explained that yesterday in Three Things that Spooked the Bond Market and Why Trump Blinked
Three Reasons Bond Yields Took Off
- The bond market thought Trump’s massive tariffs would be highly inflationary, more like stagflationary actually.
- The Senate passed a budget bill with no cuts. Budget cuts to be announced later. Yeah right.
- In February, the Trump administration announced an 8 percent cut in defense spending. Trump just reversed that to a 12 percent increase. Massive budget deficits are coming.
On top of those fundamentals Hedge funds were blowing up with their bond market bets.
Q: So what’s been fixed?
A: Nothing.
But that’s OK because Trump says the current bond market is “beautiful”.
Competing Theories
- Trump concocts ridiculous definition of “reciprocal” to goad China into retaliating. Socks and bonds crashed in response. This is a 5D chess planned idea.
- Trump capitulated with a 90-day pause reacting to the plunge in stock and bond markets.
Fact check: Trump “I was watching the bond market. The bond market is very tricky. I was watching it. But if you look at it now, it’s… it’s beautiful. But, yeah, I saw last night where people were getting a little queasy.”
Now, who are you going to believe, the bond market reaction or Trump’s description of the bond market?
Ackman a True Believer Again
Here’s a Link to the Ackman Exchange.
A Third of Yesterday’s Massive Rally Vanishes, Who Knew What When?
Earlier today, I noted A Third of Yesterday’s Massive Rally Vanishes, Who Knew What When?
The selloff escalated to over half of the rally on the Dow, then fell to a quarter, and as I type it’s back to about a third.
I have no idea where the equity markets close. But If bonds continue to react weakly, any stock market rally is headed nowhere.
What’s Gold Saying?
Also consider my January 31, 2025 post Gold Hits New Record High, Dear Jerome Powell, Is Everything Under Control?
At the time I wrote that post, gold was $2796. Gold is now $3,190.
Gold does not believe the Fed has things under control, the bond market does not believe the Fed has things under control, and neither do I.
30-year Treasury yields have been knocking at 5 percent for the last 2 years. Denied only by Fed/Treasury schemes.
October 2023, yields on 30-year Treasuries broke above 5 percent. Janet Yellen complained there was no liquidity in the Treasury market. Powell quickly indicated future FFR would be cut by 1.5 percent, which equally reduced BTFP loan rates. Corporate traders could arbitrage cheaper BTFP loans to option stocks and Treasuries. Sudden liquidity rallied financial markets. Treasury yields gapped down and equities gapped up.
May 2024, 30-year Treasury yields increased to 4.7 percent. Yellen manipulated Treasury debt issuance, a reported equivalent $800B in QE, to suppress long rates. Yields on 30-year Treasuries fell back to the lows from Powell’s 1.5 percent future rate cut predictions.
January 2025, 30-year Treasury yields climbed back up to 5 percent, after their low in October 2024, when Powell partook in a double decker FFR rate cut and Yellen ended her issuance shenanigans, a month before elections.
There is a technical island reversal in 30-year Treasury yields at 4.4 percent, which is highly unstable and likely to be filled, for the whimpering Trump haters.
Mish,
I went back and re-read your piece on gold from Jan 31, 2024. Given golds performance I see that much of what you spoke of has manifested in higher prices for gold. At this point we can probably conclude that DOGE will not yield $2 or even $1 trillion in savings. some would argue that it will yield no savings as legal and fraud costs will be higher and savings lower than advertised.
Indeed I have observed gold performing well in deflationary periods as well, Particularly during the housing collapse of 2007-2012.
Since your article gold has performed will even with the dollar getting stronger or sustaining its value. Now that the dollar has rolled over gold has the three major supports of a falling dollar, tariff uncertainty and central bank purchases.
Am I correct in observing that the CME has pulled out of Singapore?
Am I correct that gold has room to continue running up?
LOL… Mish, you’re hilarious.
That’s not “CPI better”, that’s deflation…
…and your silly tirade at Ackman makes you look stupid and unhinged. Calm down.
Easy, Rinky, slowing inflation is not deflation. Deflation only happens during a severe recession.
Playing dumb is the motto of the day … besides, these guys probably all got inside information.
ackman is angling for limelight or position. it’s insanity. everyone without a motive knows it. don’t worry. only 45 months left of the mad king.
I predict he won’t last that long 😏
who knows. the mad king dodged that bullet when biden’s SS looked the other way with the hit attempt in butler PA. old Zion Don literally dodged a bullet. not long odds that an attempt on his life again, as you are suggesting. now he has powerful men of the entire world against him. season 2025 in pax dumbfuckistan is great. crumbling empire 101, for the more academic types.
White House may seek binding control over Columbia University through consent decree https://www.theguardian.com/us-news/2025/apr/10/trump-columbia-consent-decree
If they really have $20 billion in assets and they’re still playing ball with this regime, they’re clowns. https://www.finance.columbia.edu/news/financial-statements-released-fiscal-2024
“Beautiful” bond market, but Trump has been jawboning Powell to cut.
Congress is a joke. Today, the House Freedom Caucus rolled over like a dog and allowed a budget framework to pass that has no mechanism to hold the Senate to further spending cuts of $1.5T (over a decade) other than promises from leadership.
These promises will be reneged on, just like all the other ones:
1.) 72 hours before voting on any bill, to give members time to read it
2.) No more money for Ukraine
3.) No more bloated “CRomnibus” bills
Prediction: Mike Johnson will rip the ball away from the fiscal conservatives again, like Lucy.
And yeah … another huge increase in defense spending. TNX 5%, here we come!
It’s not the house’s place to hold the senate to anything.
That is a fair point. The real solution for the Freedom Caucus is to oust Mike Johnson. They should have done so back in January.
JayFromGA here.
I can agree with that. Johnson is just a McCarthy 2.0.
Did any one really expect anyone in government to control spending? Congress? Ha! The Senate? Ha! Trump? No way, he is raising Defense spending by 12% to cover up for the crashing GDP. Complains like crazy about over spending and then does it.
Politicians are born liars.
Yep. It’s literally the same old sh*t but with the drama.
Three Reasons Bond Yields Took Off
4 Tariff to many countries cause disruption of global money flow. Lesser investors to bid treasury bonds and rates up.
10 yr treasury went up from 3.9 to 4.5% in 2 days.
Is my thinking sense?
Mish, do you think we’re on the precipice of the USD losing reserve currency status? I’m noticing gold hitting new highs, EUR gaining relative to USD, and treasury bond yields increasing even though the CPI came in lower than expected. What do you think?
no chance
There is no suitable replacement
Discussed Here
https://mishtalk.com/economics/trump-wants-a-weak-dollar-but-needs-a-strong-one/
EUR is not a real currency, it’s the DM with stragglers keeping it weak for trade.
CNY is not a real currency, it’s the CCP’s efforts to lie, cheat, steal, manipulate markets.
JPY is a basket case economy; SEK, CAD, AUD, all too small and weak and local.
GBP is the only viable alternative to the USD, and it’s not big enough, but it has credibility due to it’s former status, and it’s longevity, and the UK’s sustained role as a conduit for the USD.
If you call Japan a basket case economy ( though perhaps you meant currency) what is the UK? They literally make nothing of consequence.
The average apartment dweller is getting dinged a lot harder than his car-driving, home-owning counterpart. This speaks to the way that the working poor are ALWAYS shafted, in almost any economic environment. There is always a new shaft coming down to the pipeline for the poor apartment dweller.
Once upon a time, getting an apartment (except in places like New York City) was a stepping stone to getting your own home. No longer. For the average person, a home is a pie-in-the-sky proposition. With costs spiraling out of control – which prohibits family-formation and lifelong savings – there is nothing standing between the working poor and eviction but a paycheck-to-paycheck existence. It is to be pitied.
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You can read more of my writings by visiting: dark. sport. blog – on the net!
You’re speaking from experience as an urban troglodyte?
Mish what was the phrase you use to say..
The party is over _____________________
Which one is The Giffer?
https://m.youtube.com/watch?v=70nSXALxHUo
Good news. This suggests the Fed was on the right track before Trump’s Big Tariff Stupidity (BTS). Now let’s see how well the Fed deals with BTS-induced stagflation.
Mish-FYI
While on my computer yesterday and going to your site I was met with scarewear…
Not once but multiple times. My android appears fine
I saw some speculation online about foreign buyers going on a buyer’s strike against US treasuries this week in response to Trump’s tariffs. In the immortal words of Bush Jr: “This sucker’s going down!”
You saw some speculation? Online? That’s brilliant. Why don’t you read what Mish says right on his own blog about USTs. There’s also abundant resources online which are not speculation on how the reserve currency functions.
We’re all online and we’re all speculating. Sorry if that offends you. Here’s Bloomberg:
https://www.bloomberg.com/news/articles/2025-04-04/treasuries-at-risk-of-foreign-buyer-strike-in-tariff-retaliation
Hopefully Bush jr is scarfing down some pretzels right now.
because they’re rushing to eurobonds?
The president of the United States brags in the Oval Office about how he helped his billionaire friends make billions with tariffs pause.
Are his friends insiders enough?
You mean President Biden and his tariffs and his billionaire friends like Soros?
Yes, I couldn’t believe Ackman’s abandonment of reason and intelligence. I emailed him during those times too! (Great minds think alike!)
BTW, Th Treasury had one of it’s better 10-yr auctions in recent years today. And it is STILL SERIOUS BOND MARKET times b/e NORMALLY THE 10YRS TRADING LIVE WOULD FOLLOW THROUGH W/ ATLEAST A TOUCH OF STRENGTH. Instead, it went down post auction. I wonder how much backdoor money the Fed one way or another pumped into the Auction to have it go well?
Systemic risk is still very much an issue.
Yes. It’s the bond market stupid. Sovereign Debt Defaults are what’s coming. And nobody can stop it. The Massive Debt Bubble is about to take on a life of its own.
Days? Weeks? Months? Years? Nobody really knows how much time is left before the Sovereign Debt get a no-bid and the market just crashes and burns….. but the no-bid moment is coming. The moment of truth. The day of reckoning…..
And none of the egg-headed PhDs at the Federal Reserve; and none of the ugly looking economists who can’t even get laid; none of the smoking blowing politicians; none of the rat-ass MSN, no, not even the Orange Man Wheeler Dealer is going to stop the Sovereign Debt from blowing up like a 100 megaton nuclear bomb…..
It’s not a matter of if, but when.
Are you ready?
Henny Penny?
Since the first moment of life, it has been more or less near some existential edge. Telling me that is telling me nothing. Something that cannot persist forever must end, yeah. But WHEN and in what form and sequence are the only real questions. These are certainly the prime questions in finance. What I heard here is hand-waving of the end times. Over any time line survival goes to zero, right, right. And if so, what then?
And, “Are you ready?” What, to such an apocalyptic event, could “ready” possibly mean? Or is it just a rhetorical device, like (I contend) the rest?
Oh, but surely it’s negative swap spreads or the global liquidity shortage? Keep up!
I do get the tepid part, but I think that its too early in the vol thumping to sort out yet. Big auction though.
The one thing the feral government could do to suppress inflation is the one thing the won’t do: cut spending. “Defense” should be cut by a lot. Let them hold a bake sale.
Better to put a cap on charged interest. Many credit cards would be cancelled and credit would be much harder to get.
Why not both?
You’re assuming he gives two hoots about Main Streeters. You may want to double and triple check your assessment.
Trump has to allow his billionaire friends to profit off the MIC. Why do you think he became president? To do right by the USA? HAHAHAHAHA
Unwinding a welfare state, ahem, warfare state, whatever, carries a very high price tag. It doesn’t just pull a lever and everyone calmly says “solved.” Lenin (not that I endorse the guy, but he had a way with catchy phrases): every society is three meals away from chaos.
In general, I agree, but we’d have to be very careful about how we cut spending. As SS & Medicare, there’s a lot of waste & fraud that needs to be found & cut. And as you find more fraud, people need to go to jail.
I do like the EO Trump just signed putting projects over budget & late on notice that they’re up for cancelation. Something has to happen to start holding contractors accountable for meeting deadlines & cost targets.
The LGM-35 Sentinel ICM is a great example. Since 2020, it’s already 40% over budget & running 2 years late. The main reason for cost increases is not with the missile itself but with command & control / missile silo infrastructure.
I say scrap it & look into extending the life of the Minuteman missiles & slowly making changes to the C&C / silos to support future upgrades.
Bonds are bid. So?
what the H are you asking?
Bonds are bid so a tepid reaction does not say much in a high vol environment where funds sell equities and then have to decrease their bonds as well to maintain balanced exposures, along with basis trade blowouts etc. Tepid is probably positive. Do you get MLMOVE bond vol index?
This Q 1 Institutions were discussing setting up a Fed structured Basis Trade backstop. But it is really MUCH more than that – it may involve China selling and likely has a (declining) credit aspect as well.
Bond investors know these inflation “figures” are understated and likely manipulated to serve a purpose. They are much smarter, as a general rule, than equity speculators.
The TIPS one-year ahead inflation rate is 2.7 percent; exactly where core CPI and the PCE are. The bond market fully trusts the inflation numbers … at least so far.