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Something for your Espresso: MELT UP!

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.
2023-06-14

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.

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