The CPI report was a mixed bag of goodies, but we remain firm in our 3–4-month forward assessment of crystal-clear disinflation. Admittedly, spot inflation still leaves room for interpretation for policy makers, and we cannot rule out a rate hike from the Fed tomorrow based on current spot inflation pressures.

The glass half full type of analyst will claim that headline inflation looks very benign and point to a few outliers in the core index being the only reason why the core index still prints at around 5% annualized.

The glass half empty type of analyst will rightfully say that we are only one big energy rally from another material inflation crisis in the US. No wonder why Bin Salman tries to force Biden out of the White House via the oil supply channel.

We remain half full, but we are not convinced that the view is shared by a large majority of the FOMC (yet).

Chart 1: CPI report decomposed