In March, the Consumer Price Index for All Urban Consumers increased 0.1 percent, seasonally adjusted, and rose 5.0 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.4 percent in March (SA); up 5.6 percent over the year (NSA).
https://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=pct_12mths
| DATE | CPIAUCSL | MOM change | 3-mo MA |
|---|---|---|---|
| 01/01/21 | 262.65 | ||
| 02/01/21 | 263.638 | 0.38% | |
| 03/01/21 | 264.914 | 0.48% | |
| 04/01/21 | 266.67 | 0.66% | 0.51% |
| 05/01/21 | 268.444 | 0.67% | 0.60% |
| 06/01/21 | 270.559 | 0.79% | 0.71% |
| 07/01/21 | 271.764 | 0.45% | 0.63% |
| 08/01/21 | 272.87 | 0.41% | 0.55% |
| 09/01/21 | 274.028 | 0.42% | 0.43% |
| 10/01/21 | 276.522 | 0.91% | 0.58% |
| 11/01/21 | 278.711 | 0.79% | 0.71% |
| 12/01/21 | 280.887 | 0.78% | 0.83% |
| 01/01/22 | 282.599 | 0.61% | 0.73% |
| 02/01/22 | 284.61 | 0.71% | 0.70% |
| 03/01/22 | 287.472 | 1.01% | 0.78% |
| 04/01/22 | 288.611 | 0.40% | 0.70% |
| 05/01/22 | 291.268 | 0.92% | 0.77% |
| 06/01/22 | 294.728 | 1.19% | 0.83% |
| 07/01/22 | 294.628 | -0.03% | 0.69% |
| 08/01/22 | 295.32 | 0.23% | 0.46% |
| 09/01/22 | 296.539 | 0.41% | 0.20% |
| 10/01/22 | 297.987 | 0.49% | 0.38% |
| 11/01/22 | 298.598 | 0.21% | 0.37% |
| 12/01/22 | 298.99 | 0.13% | 0.27% |
| 01/01/23 | 300.536 | 0.52% | 0.28% |
| 02/01/23 | 301.648 | 0.37% | 0.34% |
| 03/01/23 | 301.808 | 0.05% | 0.31% |
The 3-month moving average (MA) seems to be settling around 0.3% per month. Inflation is clearly subsiding relative to mid-year 2022 but is still higher than the Federal Reserve’s target of 2%.
The banking crisis is expected to affect small and medium regional banks, slowing the economy by a yet-unknown amount. The Fed has put programs in place to help banks cope. Financial stress has subsided. Financial conditions are steady and VIX has subsided to a low steady state. Flight-to-safety buying of Treasuries has topped and the yields have stabilized at a much lower level than before the crisis.
The Fear & Greed Index is in Greed. The trade is mildly risk-on.
The 30-Day Fed Funds futures pricing data shows that 80% of market participants expect the Fed to raise the fed funds rate in early May by 0.25% from the current level of 4.75 - 5% to 5 - 5.25%. The market is unanimous that the fed funds rate will be cut by January 2024. This conforms with the “dot plot” from the FOMC that predicts a median fed funds rate of 4% in 2024 and 3% in 2025.
The stock market has risen since the banking crisis but is still within the steady channel that started at the beginning of 2023. The USD and natgas are falling while gold, silver and oil are rising. Copper is stable.
Most economists expect a recession in late 2023. The Conference Board Leading Economic Index® (LEI) for the U.S. fell again by 0.3 percent in February 2023 to 110.0 (2016=100), after also declining by 0.3 percent in January. The LEI is down 3.6 percent over the six-month period between August 2022 and February 2023—a steeper rate of decline than its 3.0 percent contraction over the previous six months (February–August 2022). Manufacturers’ new orders have topped and are slipping.
There are no new crises in the news.
The markets are uncertain about the direction and timing of the economy and the Fed.
The METAR for next week is partly sunny.
Wendy