5 Things We Watch: (Dis)Inflation, FOMC Meeting Minutes, The Debt ceiling, Energy and Japan

Another week, another Wednesday, where we share our thoughts on the 5 most important topics in markets and macro. Read along!
This week have chosen the following 5 things that we think are crucial in understanding the current picture:
- Inflation – Will anyone talk about inflation in 6 months?
- FOMC Meeting Minutes – how does the Fed address the current situation?
- Debt Ceiling – anything to look out for?
- Energy – a buy or?
- Japan, BoJ and the flight back home
Inflation – Will anyone talk about inflation in 6 months?
Today the most important and market-impactful number throughout 2022 was released. But will anyone talk about it in 6 months? We don’t think so. Almost every indicator that we can find screams disinflation, and we find it very unlikely that inflation will suddenly re-accelerate. (For more on where inflation is heading in our opinion, have a look at 10 forward-looking inflation indicators in this article)
Today’s report is right as we projected it to be. Headline CPI comes in at 0.1%, while core CPI remains at 0.4% for the 4th consecutive month. Seems like the sticky part of CPI is a bit more sticky than one would expect (which we touched upon earlier today in this piece).
Nevertheless, the report is apparently still a compass for markets, telling them whether to head north or south – don’t expect the number to have the same value in a couple of months. Markets are liking the deviation of 0.15 percentage points, sending the 10-year yield down by approx. 10 bps and QQQ up with 1% right after release. A good day to be long tech and bonds for now.
Chart 1: CPI Decomposed
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