Upside-Downton Inflation

By Michael Every of Rabobank

The US CPI report for August is clearly going to be the major market focus today. Expectations are 0.4% m/m headline and 0.3% core, equivalent to 5.3% y/y and 4.2% respectively. Who, especially among those saying inflation is not a problem, had a 5%+ headline figure pencilled in for this stage in the year?

As a warm-up for that report, replete with all the methodological problems covered here before, consider that the New York Fed’s own inflation survey released yesterday showed median 1-year-ahead inflation expectations increased by 0.3ppts to 5.2%, the tenth consecutive monthly increase and a new series high, and median inflation expectations at the 3-year horizon also increased by 0.3ppts to a new series high of 4.0%. Both increases were broad based across age and income groups. In other words, the public the New York Fed, the home of Wall Street, speaks to, still expects

Keep reading this article on Zero Hedge - Blog.

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