November CPI report: We’re on plan

As the November CPI report moderates, disinflation continues apace

As the great and powerful Fed of Oz prepares to render his decision (ha ha ha) on the Fed Funds rate, the bond market is popping and leading a party atmosphere (well, Wayne and Garth have been in party mode all along) in other markets to party along too. I know, because I am short both the SPX and DJIA (and none too happy, though not surprised) against some long positions in broad stocks and a host of gold stocks. We have our upside tolerances and limits with which to mange the situation.

Anyway, the November CPI report is on plan because the plan is for markets to initially celebrate the fading of inflation – you know, like with headlines like this…

November cpi report on inflation

You can click the graphic for the article, but here is the summary…

November CPI report on inflation

Meanwhile, to no surprise the 30yr Treasury yield ‘Continuum’ has dropped to a support area at 3.4%.

30 year treasury bond yield (tyx)

Not sure what could see it hold here, other than a resumed party in risk on assets that could firm the Fed to stay with the hawk bias a while longer. But the larger point is that if/as the Q4-Q1 party drags on into Q1, 2023 casino patrons may eventually see a precipitous decline in inflation signals, stop cheering and start worrying about what is driving the failure of the inflation. What’s that old saying? “It’s the economy, stupid?”

In this case, an economy that was literally printed out of the 2020 pandemic crash.

coronavirus, covid-19

But for now, you go, Wayne and Garth. You go…

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