The 1st comments from a Fed official post the CPI comes from Richmond Fed Pres. Barkin who simply says:
- Inflation is still too high
- Demand remains elevated at the same time supply is constrained, process of getting back to balance has been slow
- Demand seems to be settling down, but still looking to be convinced that will feed through to inflation
- Still a question whether inflation can settle while labor market remains as strong as it is
- Comfortable doing more with policy if incoming data does not confirm inflation will return to target
Fed’s Kashkari is also expected to speak shortly.
The inflation still by definition remains above the Fed target of 2%, but the trend is more favorable. The shelter component, which accounts for 34% of the CPI, rose by 0.4%. The price of housing has remained steady despite the spike up in rates. An supply of housing remains low. So what Barkin says applies directly to the housing sector which is indeed elevated.
Having said that food prices for the year are up 5.7%. Food away from home increased by 7.7% (most people can attest to that by looking at their local restaurant menus).
Prior to the report, WSJ Nick Timiraos tweeted:
Stocks have come off higher levels in premarket trading at 9:54 AM ET:
- Dow is up 156 points
- NASDAQ is up 130 points
- S&P index is up 27.5 points
This article was written by Greg Michalowski at www.forexlive.com. Source