Core services CPI +4.5% annualized, Core CPI +4.1% annualized, all-items CPI +8.1% annualized in September from August.
By Wolf Richter for WOLF STREET.
The month-to-month all-items CPI spiked by 0.65% in September from August seasonally adjusted (+8.1% annualized, blue line in the chart), the second month in a row of sharp acceleration, after a low positive reading in July and the steep negative reading in June when energy prices had plunged.
Year-over-year, the all-items CPI, which includes energy and food, accelerated to 3.7% in September. Since the beginning of 2020, it has surged by over 30%.
This inflation has spread deeply into the economy. Only part of it was driven by the jump in energy prices.
A big driver was the “core services” CPI, which jumped by 0.37% (+4.5% annualized). Core services move the needle: They account for nearly two-thirds of the all-items CPI and include housing, healthcare, insurance, etc.
Another big driver was the jump in “core” goods prices, the worst since January 2025 (they exclude energy and food). Among the main culprits: prices of electronics and related products, thanks to the AI boom, and prices of used vehicles.
The “core” CPI, which excludes energy prices and food prices, jumped by 0.33% month-to-month (+4.1% annualized), the worst since April, pushed up by the core services CPI (+4.5% annualized) and not helped by the core goods CPI (+3.1% annualized), the worst since January 2025.
Year-over-year, the core CPI accelerated to 2.6% (red line).
The biggie, inflation in services.
The core services CPI, which excludes energy services such as electricity and utility natural gas services, rose by 0.37% (+4.5% annualized) in September from August (blue in the chart below).
Part of that was driven by the resurgence of housing costs. And part of that was driven by non-housing costs as the “supercore” services CPI, which excludes housing costs, jumped by 3.7% annualized in September from August.
Year-over-year, the core services CPI rose by 3.2% (red line).
Since the beginning of 2020, the core services CPI has surged by over 31%.
Owner’s Equivalent of Rent (OER): +0.35% in September from August (+4.3% annualized); +3.3% year-over-year:
Rent of Primary Residence: +0.32% in September from August (+3.9% annualized); +2.8% year-over-year:
Supercore services (core services without housing): +0.31% September from August (+3.7% annualized); +3.2% year-over-year.
Airline fares (+1.2% monthly, +22% year-over-year) and motor vehicle maintenance (+0.72% monthly, +5.8% year-over-year) were among the drivers.
The “core goods” CPI (all goods except food & energy) in normal times reflects a very competitive environment marked by lower per-item production costs due to globalization and ever more efficient automation of manufacturing. The internet has made comparative shopping very easy. So generally, core goods are marked by either low inflation or slight deflation. And they generally counterbalance the much higher inflation in core services.
The pandemic inflation spike blew that apart. Goods prices spiked more than services. But then, coming out of that, goods prices began to drop, including and on a very large scale for used vehicles and electronics.
That phase appears to be over. Over the past three months, core goods prices, including for used and new vehicles, and for electronics, have been rising at a sharp clip on a month-to-month basis. And that has started to move up the year-over-year inflation reading that had been decelerating.
The core goods CPI rose by 0.25% (+3.1% annualized) in September from August, the biggest month-to-month increase since January 2025. Year-over-year, it reversed the deceleration trend and accelerated to 0.71%.
The energy CPI spiked by 5.2% month to month and by 20.4% year-over-year.
The crude-oil based fuels spiked. Gasoline (roughly half of the Energy CPI), spiked by 9.3% month-to-month and by 35% year-over-year.
Electricity rose by 0.2% month-to-month and by 4.4% year-over-year.
Utility (piped) natural gas eased by 0.3% month-to-month but year-over-year jumped by 5.0%.
Since the beginning of 2020, the Energy CPI has surged by 53%. The chart shows the price level, not the percentage change:
The CPI for food at home edged down month-to-month but rose by 1.8% year-over-year, with some prices falling and others rising.
On the decline side: Egg prices have collapsed from their ridiculous spike. The price of coffee, after a ridiculous multiyear spike, has been coming down for a few months. The price of beef appears to have topped out, after a ridiculous multiyear spike, and has started to come down. Pork prices have edged down in recent months, as has dairy.
The prices of other foods have risen, including chicken, fresh fruits and vegetables, cereals, etc.
Food prices are volatile, jumping up and down. They had massively spiked during the pandemic, leading to mega profit margins for food retailers, and then hit a ceiling as shoppers refused to keep paying whatever and started shopping around once again, including online. And retailers that continued to raise their prices to fatten up their profit margins and boost their stock prices, lost sales and now started whining about consumers being tapped out (that’s you, Albertsons), when in fact, consumers bought somewhere else at a lower price, including online. Consumers are the only force that can even try to keep a lid on consumer price inflation. When they stop trying, prices spike.
Since the beginning of 2020, food prices have surged by 32%. This chart shows the price level, and not the percentage change:
In case you missed it: The US Economy “Is Running Hot,” Lots of Consumer Spending Growth, Lots of Inflation. The Bond Market Sees it Too
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Fake wars with Iran to drive up oil prices (profits for big oil) really work!
RB,
Fake war? All oil not big oil and prices relative to the price of oil in 1980 (40 USD a bbl) and Natural gas (3 USD/MMBTU ) in 1980 shows you are getting a bargain for your energy needs in 2026 after energy costs in the 1990s as low as 8 USD a bbl. Also 2020 brought about negative oil prices as storage costs rose dramatically with no place to store oil .
Oil and gas are not easy to find and produce like some other commodities as technology requires more and more capital to supply the limited resources.
In addition a great deal of the higher prices for gasoline and diesel are the result of more efficient use of these fuels that has led to massive closures of refineries across the USA over the last 5 decades.
These refinery margins are high at the moment and are not necessarily the results of the “fake war”. As Ukraine about fake wars which also has affected the world energy markets.
Its not about price, its about control.
Venezuela
Straight of Hormuz closure.
Russian sanctions and embargo
Whose left that is not in the US sphere of influence?
Gentlemen,
As we discuss oil prices. Current oil reserves (at current consumption rate) are only going to last 50-57 years. Let that sin in. Our kids are not going to have oil if we consume the way we are consuming. I work in Texas and closely associated to oil. everything you see around you including the clothes you are wearing are a by product of oil. I say oil prices are not high enough. We seriously need to cut down oil use by multiple folds so we can get more than 120-130 years out of it.
Imagine just in 25 years, the remaining global supply of oil will be just for another 25-30 years. At some point we need to see beyond oil and figure out how to substantially reduce our dependence on it. You are relying on engineers to figure out to extract oil from deep below earth on techniques which are not invented yet. Even if we invent those techniques, oil will be super expensive.
Do you read Mike Shellman over at Oily Stuff? I get a bird-of-a-feather vibe between yours and his musings.
“are only going to last 50-57 years.”
LOL that long? For the last 20 years, I’ve been hearing that they’ll only last another 10 years, a rolling 10 years 🤣
We’ll run out of clean air to breathe before we’ll run out of oil to burn.
It has been true that the total years of proven reserves has been steadily increasing over time from about 30 years in the 70s to 45-50 years today, so there’s little evidence that we are actually going to run out.
Exactly right! New technologies in exploration and production allow us to find and extract more oil. One would expect oil prices to rise as the easier fields are used up, but (adjusted for inflation and disregarding current “special” conditions) oil prices haven’t risen much.
It depends on whether the next technological innovation like fracking comes along, or not.
Had fracking not worked, we’d already be living in a world of declining oil.
So I think the OP is asking how wise it is to build an entire society’s infrastructure on the assumption that the engineers pull another rabbit out of the hat.
“engineers pull another rabbit out of the hat”
That has been a fact of life for the entire history of mankind because that’s how the human brain operates.
maybe someday, mankind runs out of rabbits and hats, who knows, but that’s not how the human brain operates; it always tries to find a better way to do something.
The hats do sometimes run out of rabbits in various industries.
For example, today’s airliners are slightly incremental improvements over the airliners of the 1970s or 1980s, and the basic format has been around for over 75 years now.
Many industries like textiles, certain heavy industries, trucking, railroads, massage, hair styling, live music, etc. are only slightly different than they were decades ago – with maybe a few add-on electronic products to improve efficiency. They are technologically plateaued, and the improvements are very incremental.
Petroleum is an industry that is over 125 years old, and was considered very mature until fracking came along and sparked hope of innovation. The experience of other industries suggests that game-changing innovations don’t just happen automatically.
200 years ago, the world ran on whale oil. It was a huge industry. We managed to wean ourselves of that before consuming all the cetaceans. 150 years ago, coal started the industrial revolution. Navies built their fleets from oak trees. Petroleum didn’t get started until the beginning of the 20th century, and now coal is kaput even though there is plenty still left in the ground. Technology will continue to advance, so I predict in 50 years we will look at petroleum the same way we look at whale oil now.
bingo. winner. someone with a rational grasp of history. i wrote a HS paper on whaling industry in 1970s. 2 whaling towns near where i grew up on north shore of LI. i live in an old whaling town now 100 miles up the hudson river from the nyc harbor. this town had it’s hay day in the 1800s. founded in early 1600s with dutch plantations…..
China did not get the message on coal being kaput.
Tom
China got that message, but you didn’t.
China has more installed wind power capacity and solar power capacity than the rest of the world combined. It is investing massively in nuclear power and has about 36 nuclear reactors under construction on 19 different sites. Coal is just a sideshow among those investments.
What a load of ish. Enjoy eating your bugs
They’ve been saying oil will run out since forever.
It’s disheartening to see seemingly perfectly rational people laugh at someone speaking a simple truth like ‘oil is not renewable, it will run out at some point and humanity will regret spending it so wastefully’.
“Here the madman fell silent and looked again at his listeners; and they, too, were silent and stared at him in astonishment. At last he threw his lantern on the ground, and it broke into pieces and went out. “I have come too early,” he said then; “my time is not yet. This tremendous event is still on its way, still wandering; it has not yet reached the ears of men.” ~ The Gay Science
History will not look back kindly on our handful of generations. But hey, the S&P is at an all time high so who cares! Everyone got their flights booked for the next holiday yet?
I’ve heard the sun will eventually implode as well.
Eventually doesn’t mean much if not accurately quantified.
This has been a debate for over 50 years: https://en.wikipedia.org/wiki/Simon%E2%80%93Ehrlich_wager
The principles:
1. Commodities are finite (but often of unknown size and source)
2. Extraction/refinement of commodities have a cost
3. Commodities are useful
So the question becomes: As we use up commodities, will they become more scarce and thus more expensive? Or will we continue to discover new sources of them and/or better and cheaper ways to extract/refine them, thus driving down the cost?
And as the Wiki page indicates, it’s part of a broader discussion of the pace of human progress: will our ability to improve things by technological advances outpace our ability to screw things up by human nature and/or resource exhaustion?
@Numbers: agreed, but oil is a unique commodity in the sense that it can’t be grown, does’t regenerate, and can’t be recycled (at least not the majority which we burn). I think the real debate should be about how we use oil. Oil is valuable not just in terms of dollars, but in terms of the extreme versatility it provides to create amazing materials we have become, and will remain, dependant on.
Creating new (synthetic) oil is possible, but it requires an abundance of energy. The world is currently not on track to reach that abundance of energy before we run out of Oil, as emerging economies with billions of inhabitans and the electrification of existing economies absorb most projected growth in energy output. There is no magic wand of technological wonder that will steeply decrease the cost of syntethic oil because of the limits of thermodynamic laws and the loss of energy in the conversion from (renewable) electricity (plus hydrocarbons) to oil.
The conclusion is that we will squeeze the last little droplet of Oil out this earth, because the cost of fossil oil is projected to remain far far lower than that of synthetic oil. That extraction will continue to increase in price as we plucked the low-haning fruits first so future oil will be harder to reach and from increasingly smaller fields (on average). That in turn will continue to drive up the price of oil until the last drop is squeezed out.
But the price in both nominal and real dollars is somewhat beside the point. The point is that we are currently still spending oil on ‘stupid’ things like combustion engines while in many cases suitable alternatives are readily available. We keep allowing vested interests of fossil fuel dependant industries (oil majors, car producers, heavy industry etc) to put their short term profits above the long-term costs of ‘wasting’ oil by burning it. But that is a choice. We could choose to take a little bit of a longer term view on oil, recognize that it’s a finite resource that we’ll sorely need in the future, and place the interests of our children & grandchildren above that of the comfort of driving a F-150 pickup truck to drive johny to baseball practice.
We should take every economically reasonable opportunity now to cut down on drilling and wasting oil reserves (especially domestic ones) because the future use of oil will be much more valuable in the quite near future than what we’re currently still using it for. The message shouldn’t be: oil is bad, stop all drilling. The message should be: oil is valuable, stop burning it so we can still drill later.
You know what’s going to inspire people to get away from oil more?? High oil prices. Watch the magic happen. But that won’t work too well if electricity prices go up too for AI centers haha
AR – I heard that because people are DRINKING all the water, the world will be water depleted (all gone!) in 5 years. We better start rationing water!
LOL!
I worked a contract for Exxon during covid in Guyana. They had just discovered one of the largest offshore oil deposits in a decade- over 20B barrels. They are now pumping almost a million barrels a day.
Technology continues to evolve in this sector. We have more oil than we know what to do with for the foreseeable future. There are tons of deposits the oil companies know about but just lack the current technology to economically retrieve it. Or they are blocked by environmentalists or politicians.
I also worked a lot in the sandbox. You can buy gas for less than ten cents a gallon in Iran. It’s the same in Venezuela. Let that sink in.
Real war. Real stupid. Real consequences.
Yes but there is a bigger economic issue that makes the so called measures of inflation as measuring the increase in cost of paying for the primitive inflation, asset price inflation.
The mirror of the measure of economic depression, a decline in asset prices, by the logic of symmetry would indicate that the root of inflation begins with asset price inflation.
Remember when we were assured that prices would come down after lockdown?
Somehow they never did…and never will
No, I don’t remember that. Probably because I was here, reading the postings on this site.
What’s the 1st rule of wolf club?
/s
!!!
Niice
Well… They didn’t really say prices would come down. They said inflation would come down, which means prices still go UP, just more slowly. Egg prices did come way down, along with 65″ TVs and gas for a little while. But after the 9%+ inflation of 2022 they hoped everyone would interpret 3% as “prices dropping”.
Now I’m in agreement with you (if you’re suggesting this) that prices SHOULD come down, a lot. 50-75% off the stock market, 30-50% off houses, 50% off gas and food, clothes, cars, etc.
Oh, and 50% off wages too so my Subway foot long can be $5 again.
Unfortunately the best we can hope for is a credit market induced financial crisis, stock market collapse, near zero inflation, asset and real estate fire sales, and FLAT everyday prices for a long time.
OR…
We could just accept 3-5% inflation for a decade, stabilize the debt/GDP ratio through growth and tax reform, not have millions of households lose their jobs, not have millions of retirees’ nest eggs destroyed, not have a housing crisis, not have a banking crisis, and not have a depression level stock market collapse.
That’s less satisfying to say than promoting a policy of deflation and Andrew Mellon-esque “liquidate everything” thinking. But it involves resetting mental anchors on new numbers instead of sending children to live in tar paper shacks, using cardboard to patch holes in one’s shoes, bread lines, shuttered businesses, and 30% jobless rates. The latter is a lot more painful than the former, especially for those not invested in bank CDs and MMFs.
Amen. It’s tiring to hear calls for massive deflation, massive job destruction and massive unemployment. It’s all the more depressing when you realize that most of the people calling for those things are the ones who have money (and/or fixed incomes) and don’t have/need jobs anymore and are just talking their book. If you have a big stash of cash and aren’t working, then of course you want deflation and don’t care if people lose their jobs.
@numbers my theory is that the actual realization of the feared event would…
1) undo the deep regret of sitting in cash-like instruments braced for doom during the past 15 years of booming equity markets by proving the person was right all along, and
2) relieve the anxiety that the feared event is right around the corner, because at that point it will have already happened.
Of course, the rational thing to do would be to accept the mistake, look at the long-term historical odds of bear markets, understand that the financial media and influencers make money off of scaring people, learn to hedge, and set an asset allocation you can live with. The irrational thing is to keep hoping for redemption and earning near-zero real returns.
No, because this seems totally confused on timeline.
COVID lockdown: The only true lockdowns were March-June 2020 and only in certain states. But if you are using this term to colloquially refer to times in which people were told to avoid going out and told to wear masks and some public groupings (like universities and schools) were held remotely, then most of that ended in mid-2021.
Inflation: higher than usual inflation started in mid-2021 and had come back down to something more normal by late 2022/early 2023, with the largest inflation peaking more than a year after official lockdowns ended, and several months after most school and public space closures ended.
So it’s impossible for people to have said prices will come back down after lockdown because prices didn’t increase until after lockdowns were over. Plus, this seems to be confusing “inflation will decrease” with “prices will decrease”, which isn’t even the same thing.
Well written. Thank you.
Observe how easily false narratives can start on the internet.
Thanks. It’s exhausting sometimes to repeat the same well-documented and easily found facts.
“Inflation of America”. A beautiful name for this mess.
Today looks like the driver suddenly realized that one tire has a few lug nuts missing.
With a scintilla of Russian diesel in the tank, this economy can ride on rims indefinitely, no biggie.
Even if the Russians had diesel to give, they wouldn’t send it to the US considering that we are fighting on opposite sides of both wars. Farmers across Russia have no diesel to harvest or plant crops which is a humanitarian crisis rapidly unfolding. The average Russian has for the past few months has finally become aware of their precarious situation.
Russia is now a net importer of energy. India and a few other small countries are exporting to them which isn’t solving their energy crisis. Someone should explain that to the current tenants of the white house.
Why do you care about Russia? Not even Russia cares about Russia.
Because it was referenced multiple times in the article and a significant driver of inflation in the US.
Well that certainly is one way to look at it
The other way is that lug nut has been working it’s way off for a long time and no one noticed
Let’s just finally admit that supply shocks are inflationary, after having been dragged into the COVID supply shock, the Trump tariff wars against the world including commodities, and the US-Iranian War Over the Strait.
They may not show up immediately, but they are not “transitory” and last longer they we would think, and spread more than we would expect, because it provides opportunities for parties with leverage to demand leverage – whether it be companies, labor, or both.
The wild thing with this one was how it was all created so quickly by a singular person deciding policy through a series of unforced errors. There was no need to do all the tariffs all at once. And the kinetic war caused the most foreseeable foreign policy disaster (military experts have been game planning a strait closure since the tanker wars)
Usually failure has many deadbeat dads denying paternity. Incredible.
What matters is whether the generally dovish Fed can be persuaded that the Iran War is not transitory. The worst of the tariffs already proved transitory (see courts overruling them and refunds going out).
The 2.6% core CPI suggests to the Fed doves that the FFR at 4% is already restrictive. We may have another 25bp rate hike ahead but I suspect the FOMC sees themselves as fine tuning at the risk of overreacting, rather than dealing with an outbreak.
Higher oil prices are already easily explainable with the Iran-Epstein war, which is owned by the White House. Thus the FOMC will be looking more closely at the core metrics, which suggests underlying inflation is under control in the 2-3% range.
CPI for September is reported as +0.6% MoM and then the same alchemists extrapolate this to 3.7% YOY. If there are 12 months in a year, isn’t 0.6% x 12 = 7.2% YoY? More if one assumes interest compounds. Someone here please explain……..
At least read the first phrase in the first paragraph in the article before you post stupid BS. That first paragraph is this:
“The month-to-month all-items CPI spiked by 0.65% in September from August seasonally adjusted (+8.1% annualized, blue line in the chart)….”
The year-over-year change (+3.7%) is the result of the most recent 12 months changes, comparing the index value of the current month to the index value for the same month last year (so, Sept 2026 v. Sep 2025).
Friendly suggestions:
Show the math for annualizing / extrapolating a single monthly number if you tire of confusion in the comments section/ peanut gallery.
Also I suggest using “extrapolated” instead of “annualized” to avoid confusion with “annual”.
E.g. “…rose 0.65% in September, which is 8.1% (1.0065^12=1.0808) extrapolated to an annual rate.”
This seems clearest to me. Personalities will differ though, and admittedly “extrapolate” is a grade level above “annualized”. So it’s your call based on how weary you are with explaining it, and how much you want to avoid misunderstandings.
FWIW I think the rare clarity is the secret sauce of this blog, so I hope you find these ideas worth looking into. I guarantee some readers only read the first few sentences and concluded you were claiming inflation was >8%, which you weren’t.
That wasn’t a ligit question after trying to understand something.
the moron didn’t even read the first part of the first sentence. He just came here to crap into the comments without reading anything. Not wasting any of my remaining time on bullshit like that. He doesn’t want to learn, or else he would have read at least the first sentence. And it’s not my job to teach this stuff to people who don’t want to learn. 1. They need to read the article. 2. If they cannot do that, they need to go back to high school and learn how to read articles and stay away from here.
QT was Transitory.
Everything else is perpetual.
There are many problems: In 6 years high cummulative inflation,(~31%). Loosening unwinding? of globalization and deregulation, (pros and cons depending). Over 20 to 30 years with many governments now trapped in deficit spending. Central banks printing and long history of disconnected interest rate policies. Now culminating in many governments facing fiscal and debt walls. Along with emmerging risks: Ai (in terms of broader worker replacement & further govt deficit issues), mass immigration (generally not a replacement for boomers and some/many incompatible with western cultural), digital currency, digital ID.
With, very unqualified, expensive, unproductive, divisive, and self interested, political leadership. Not that voters and corporates are shining lights of prudent public interest, either.
NY Fed governor John Williams is jawboning this week, no hikes seen in 27! Is he in denial or just serving Wall Street(his constituents) and not Main Street?
The inflation trend is up, with strong employment from a smaller workforce(definitely the grey economy workforce) fed fund hikes are needed. If we don’t get a hike in October the long bond will loudly protest, if it doesn’t scream “fix the fiscal insanity” before than.
Yes to both of your questions.
Remember, long bond yields are more a product of a lack of demand. Since yields are generally up globally – including the spendthrift Germans and the commie French – I don’t buy that it’s a nation-specific story.
What is up globally are increased oil & LNG prices, and somewhat related to that, military spending. Also, deglobalization entered the chat, which caused increases to costs to companies are likely trying to pass them along downstream with varying levels of success.
The lack of demand in bonds seems to be a better moderator of inflation busting interest rates than some petty 0.25% bread crumb begging the population has doing for years now to the Federal Reserve; that is so independent that it doesn’t have to listen at all to the population (subjects) that it governs.
Whatever is dropping the demand for bonds, we need more of it to get those interest rate increase – inflation decrease magic spells. President Trump’s jawboning recently of lowering the debt by inflation has done more to get rates where they need to be than the FOMC’s pawn shop for oligarchs overnight loaning interest rates have for years.
IDK.
Did demand dry up in early 2023 only to suddenly reappear in October that year? Did something about the US’s deficits, credibility, or debt/GDP change? Is every zig zag over the past five years explainable that way?
I’d be careful about marrying any particular narrative right now. Especially not the ones who can’t explain even recent history.
When Willam’s talks traders pay attention, like wink wink change your positions or at least get ready to reposition. A year ago or so I offended wolf by calling Williams and the New York Fed the PPPT, wolf told me I was a conspiracy nut and other not kind words. But at that time After Williams spoke the Fed futures changed overnight risk rallied from an inflection point. The algorithm proceeded his words and reacted. Wink wink. The Talking kids think $tnx is out of the woods. Or at least a coordinated buy effort was in. The problem is So much future supply buyers will get exhausted even with the AI bubble collapsing. The need for real capital only gets more when equity prices fall.
People need to remember that it is 2027 in 2.5 months. Covid started nearly 7 years ago. 7 years. That means we’ve run hot inflation reports for almost a decade and the powers that be still can’t admit there’s a problem.
We are done for.
What if inflation is the solution rather than the problem? And what if it has little to do with a pandemic that ended years ago?
Excellent as always. So seems the FED *should* hike the last meeting before mid-terms … last time they did that was Nov 2 2022 and the time before that was 1978!
Time to do a 50bps hike “Stun & Done” :)
Will you be blaming the Fed for bursting the AI bubble and causing the recession?
Nice episode on Thoughtful Money with Adam Taggart with Wolf.
When do we start hearing “most reckless FED ever” again?
When I said that, the Fed was at 0.0%-0.25% and still doing QE, and inflation was 6% on its way to 9%. Now the Fed is at 3.75%-4.0%, and it reduced its balance sheet by $2 trillion, while inflation is in the 3-4% range. So back then, that recklessness was in a category of its own.
Our 2 local Counties have publicly proposed a 43% and 17% tax increase. Local Gov’t can’t print money so it was bound to happen as their expenses have increased same as ours. They floated the increase amount to get the public outrage overwith. But there was little reaction so far. I think most people expect more inflation. And that expectation will enable prices to rise further. I don’t see any way out of those expections other then a recession that lingers. Cheers.
The 10 year treasury is crashing. Make it make sense.
This blip is a flight to quality purchase as asia crashes overnight. Whenever there is an overnight “crisis”, you will see this. Don’t worry, rates will relentless march higher between the blips. The fiscal deficit spending, 3.6% social security COLA, etc. are not going away any time soon. The energy crisis and wars will just get worse from here, because Trump’s ego requires it. I’m not usually political, but facts are facts.
So the yield is crashing, meaning that the price is spiking, which is a rally in bond land. The bloodbath is when yields spike and prices plunge.
I would think yields would climb much higher given these bad inflation numbers, not fall.
I hit up Google Fu:
“Key Drivers of a Bond Rally
• Central Bank Rate Cuts: When the Federal Reserve or other central banks lower benchmark interest rates, existing fixed-rate bonds become more attractive.
• Economic Slowdown or Recession: Investors often flee to the safety of government bonds (like U.S. Treasuries) during economic downturns, pushing demand and prices higher.
• Cooling Inflation: Lower inflation means fixed coupon payments lose less purchasing power, increasing demand for bonds”
None of this is the case. Seems weird that yields would all of a sudden crash into oblivion given today’s data.
Nikkei crashed 4.5%, Kospi crashed 8.5%. Flight to quality Treasury purchases. It it a thing. Ask your AI.
The demand for money has been rising; velocity falling. The precautionary motives predominate. The economic outlook is uncertain.
We’ll get another GDPnow report today.
The demand for money has been rising; velocity falling. The precautionary motives predominate. The economic outlook is uncertain.
We’ll get another GDPnow report today.
This am
10-Yr Bond
5.10
-0.09 -1.70%
Given that the Nikkei and Kospi have both doubled in 18 months, a correction was probably overdue.
Seems everyone has decided to back off a little on tech/chips stocks and that money needs to go somewhere.
If the Fed doesn’t hike after this, it is a dereliction of duty. I have a bunch of I bonds that will be paying 7.48% to 7.68% due to this CPI report.
Nice. Looks like their fixed rate puts them somewhere in the 1998-2001 vintage. The fixed rates got a lot less generous after that. Your patience is rewarded but that also means they’re creeping up on the 30 maturity cliff (and a forced tax bill), no?
Yes. That has been a problem. I have “too much” approaching a wall, and it will be interfering with my income management for the next seven years. I only sold a tiny portion of my SLV this year because of this roadblock.
I keep my household’s federal modified adjusted gross income below 400% of federal poverty level each year to qualify for ACA subsidies.
I effectively live the exact same lifestyle as a wage earner household earning $140K/yr.
Actually, better. I pay $0 state taxes while living in California.
With inflation doing what it’s doing now where the hell are all those modern monetary theory guys now?
‘Oh yeah, we can just print our way out of this’! You cannot make this stuff up.
I’m not an MMTer, but in their defense, part of the “theory” is using taxation to remove excess liquidity from circulation. That’s the part that never gets implemented, much like Keynes’ theory that you need to get your fiscal house in order during the good times. We never do that either.
Exactly.
Perhaps neither theory accounts for human nature – to be as short term thinking and greedy as we can.
Wolf’s inclination to nibble at bonds worked out.
I will back up the truck once the trend is confirmed.
2023 may be repeating itself.
It’s weird I can’t see $move charts for today, like it’s a holiday. $move is the vix indicator for bonds. Anyone else having issues charting $move today? Or can you see what it’s trading at?
Thanks