Don’t Get Too Excited Over One Good Inflation Report
The trend is positive, but there are still too many questions about where consumer prices go from here and not enough answers. Plus, another exposive day in crypto-land.
Don’t get too excited. Inflation hasn’t been defeated yet. t
Photographer: Juan Mabromata/AFP via Getty Images
Let’s be clear: the US consumer price index report for November was good, better than expected and tended to confirm reasonable hopes that inflation is beginning to trend downward. After several very ugly upside surprises since the beginning of last year, it was reassuring indeed for prices to rise at a slower pace than economists forecsast.
That leads as ever to the question of the reaction in markets. Stocks rose and bond yields fell, as might be expected. But the moves weren’t as emphatic as we’ve witnessed after several inflation reports over the last two years, and initial exuberance was dialed back significantly by the end of the day. The reaction seems sensible. Let’s review why.