The inflation report provides a surprisingly soft set of data, aligning perfectly with the FOMC’s hopes, but not with their predictions. Back in June, the FOMC projected only one rate cut while hiking the inflation forecast to levels that now seem feasible to undershoot. 

This report, as soft as it gets, shows transportation services down by 0.5% for the month, and shelter prices have only increased by 0.17% MoM. Goods continue to experience soft deflation, especially in the automotive sector, which we had anticipated. 

Even though the famous auto-insurance category saw a 0.9% MoM rise, significant drops in airline fares and public transportation costs have led to an overall decrease in transportation services for the month. Ay caramba! 

This is just what the JayMan needed, validating our soft lean ahead of the report. The soft headline details are a welcome surprise, suggesting a turning tide in broader asset allocation trends in the coming weeks, with celebrations not only in the U.S. but also in Beijing and Tokyo.

It’s time for a blow-out top now! 

Chart 1: Transportation Services plummeting