July 13, 2022
Good morning,
If rising inflation fear has been the primary fuel for this year’s bear market, then this morning’s June CPI release would normally be another log on the fire. Economists expect another high for year over year change of the CPI at 8.8% – 8.9%.
However, markets look ahead, and one could argue that today’s headline data point is already out of date thanks to the recent downturn in energy prices.
Last month will probably be looked at as the peak for inflation. Away from slow hard data like the CPI, inflation expectations are already retreating. Five-year, 10-year, and 5-year/5-year inflation swaps all peaked weeks ago. Going forward, the glide path lower for inflation will probably be a key factor.
Be well,
Mike