The markets this week seem to have been focused in 3 things: “Inflation, Inflation, and Inflation”. US PPI was unchanged at 8.6% YoY , still excessively high. US CPI was released a day later and came in blistering at a YoY rate of 6.2%, its highest level in 30 years! In addition, the preliminary Michigan Consumer Sentiment figure for November was worse than October at 66.8 vs 71.7 last, primarily due to rising inflation and that consumers no feel that there have been efforts to contain it. The 1-year inflation outlook was 4.9% vs 4.7% in October. Remember: The Fed’s target inflation rate is 2%! Therefore, 1-year inflation expectations are much higher than the Fed would like!
