Month-on-month indicators down, particularly core PCE:

Figure 1: Month-on-month CPI inflation (blue), PCE inflation (black). NBER defined peak-to-trough recession dates shaded gray. Source: BLS and BEA, and author’s calculations.

Figure 2: Month-on-month core CPI inflation (blue), core PCE inflation (black). NBER defined peak-to-trough recession dates shaded gray. Source: BLS and BEA, and author’s calculations.

Partly as a result, the 5 year inflation breakeven has continued to decline.

Figure 3: Five year inflation breakeven, 5 year Treasury minus 5 year TIPS (blue, left scale), 5 year breakeven adjusted for both inflation risk and liquidity premia, per DKW (red, left scale), both in %. Source: Treasury via FRED, KWW per DKW, and author’s calculations.

Keep reading this article on Econbrowser Blog - James Hamilton & Menzie Chinn.

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