CPI came in at 0.1% ex-food and energy which was much lower than the 0.3% analysts expected. Despite soaring energy prices we continue to see very benign inflation readings. Core CPI was also 0.1%.
As we suspected, the reflation trade is well ahead of itself. The signs of inflation are simply non-existent. While we’re seeing record amounts of money printing, the money just isn’t entering the economy. M1 multiplier is stable after a multi-month cliff dive. Expect this trend to continue in the coming months. The bond market is obviously loving this news after a much undeserved beating over the last few weeks.