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Last Hurrah for Year-Over-Year Inflation, Rate has Peaked or Soon Will

For reasons explained, I expect the year-over-year rate of inflation to take a big dive.
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CPI Month-Over-Month 2021-09 Looking Ahead

Inflation Genie

The overwhelming consensus opinion is that the inflation genie escaped the bottle and will not be put back in.

The next CPI report is tomorrow morning. Here's the Econoday consensus. 

Econoday CPI Consensus 2021-10

Contrary Opinion

My opinion is the same as that of the bond market. Despite a Huge Upward Surprise in Jobs on November 5, treasury yield dipped. 

Earlier today I reported, Producer Prices Jump Another 0.6 Percent in October Yet Bonds Yield Dive

Yesterday we had an interesting bond market reaction in which yield on the long bond fell but yields on the short end rose and middle rose. 

Forward looking, these are recessionary reactions. 

CPI-Year-Over-Year

CPI Year-Over-Year Percent Change NSA 2021-09 Looking Ahead

Despite month-over-month increases of 0.9, 0.5, 0.3, and 0.4 percent in June, July, August, and September, the year-over-year rate has been flat.

There are easy comparisons for the next couple of months but then what?

CPI Looking Ahead

A year ago the CPI only rose 0.1 percent. So I do expect we will see another year-over-year high tomorrow. The comparison is just too easy.

Looking ahead a couple of months is another matter.

The Fed is tapering. The miraculous stock market rise has fueled demand for cars, electronics, and housing. 

The inventory build has been massive. Third-quarter GDP was positive only because of an inventory build. 

Belief that stocks and the Fed can do no wrong is perhaps the biggest bubble there is. 

What About Rent?

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Off Hiking

I will not be in a position to comment on the CPI tomorrow until late in the evening. 

I will be hiking the Subway Trek in Zion. 

So those were my comments in advance.

Subway - Zion National Park (4)

Here is my post on Zion National Park – Subway Trek Part Three – Inside the Subway

More Subway Images

Also, see Zion National Park – Subway Trek Part Two – The Crack

The Crack - Subway Trek - Zion National Park  (18A)

For more information regarding the “Subway Trek” and a nice shot of Archangel Falls as well, please see Zion National Park – Subway Trek Part One – Archangel Falls

Archangel Falls - Subway Trek - Zion National Park (2)

Advance CPI Comments

Don't be surprised if the CPI hits a new year-over-year high tomorrow and the bond market looks the other way or sideways. 

Whatever the reaction, I will be out hiking. 

But stay tuned in. I have some interesting economic posts auto-scheduled while I am hiking.

Thanks for Tuning In!

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