by Bryce Coward
Knowledge Leaders Capital
Last week we commented that despite the very tame CPI reading, alternate measures of inflation were telling a different story. Chief among them are inflation expectations as priced by the Treasury bond market. Well, this week we again got another inflation data print that showed a rather subdued inflation backdrop. The import inflation price index came in at 0% MoM while expectations were for a rise of 0.2% MoM, so it was a decent size “miss”. And yet, inflation expectations across the short to intermediate legs of the yield curve are hitting cycle highs again. Moreover, the message from the most inflation sensitive assets is confirming the message from inflation expectations.
This setup reminds us of the Groucho Marx/Richard Pryor line, “who you gonna believe, me or your lying eyes?”