Rate Curves
- 1M Treasuries rose 79 bps (WoW) over growing concerns on the US debt ceiling debate, the risk of default and the much-anticipated 25bps rate hike in the FFR.
Rapid Report:
This week we examined the recent release of CPI and inflationary data from the Bureau of Labor Statistics. Overall CPI came in at 4.930% and CPI Less Food & Energy was at 5.519%. This marks the second month in a row that the latter was above the overall metric. Prior to this, overall CPI had not been below this level since both were beneath 2%.
We focused specifically on food and energy as consumers feel the effects of inflation from these costs on a weekly basis. We can see that several food items as well as gasoline have come down off their recent peaks; however, prices remain elevated from just 2 years ago. Overall, “food” remains up 7% YoY.
As we drill down into the data further, we can see that the drop in the overall CPI was largely due to significant changes in the cost of various energy inputs. Given that energy and raw material costs have downstream effects, its is no surprise that items such as food, electricity and airline fares see a corresponding increase. The lagging effects these inputs have should become self evident in further CPI declines.
Another lagging effect in CPI is housing costs. Various reports indicate housing costs are dwindling as apartment rents are declining in numerous metro areas and house prices have demonstrated the first declines in many years.
