Something for your Espresso: MELT UP!
The CPI report was a mixed bag of goodies, but details were relatively soft as for example core services ex shelter printed at 0.16% MoM or just below 2% annualized – the softest print since July-22 and consistent with Jay Powell trying to orchestrate consensus around a “skip”. The “Powell-flation” measure is running below 10yr averages now. Powell needs to invent a new favorite inflation measure or else he must be satisfied.
The details leave us convinced of a Fed “skip. We digested the CPI report in detail here.
Chart 1: The Powell Indicator is weaker than 10yr averages
The inflation report was a mixed bag of goodies, but good enough for the melt up to continue! The “Powell-flation” indicator points to a pause from the Fed this afternoon, which is likely to emphasize the MELT UP for now.