Our outlook for 2022 has been that the rate of change for economic growth and inflation would slow compared to 2021.  In prior historical periods when this has occurred, long-term interest rates have declined.  This has been especially true when the Federal Reserve has been increasing short-term interest rates.  Thus far in 2022, long-term interest...Read More

Consumer spending, especially durable goods, spiked from the second quarter of 2020 to the second quarter of 2021.  This was aided by a combination of increased incomes via fiscal policy and a lack of an ability to engage in services activities because of COVID.  While incomes have started to come down (especially on a real...Read More

Treasury rates have been increasing in 2022 and continued at an accelerated pace in the month of March.  This has carried over into other borrowing markets, including residential mortgage rates.  The increase in mortgage rates has already impacted housing related data through the month of February and will likely have a large impact on March...Read More

The Federal Open Market Committee (FOMC) voted to start increasing the target range on the Federal Funds Rate last week, moving the range from 0-0.25% to 0.25-0.50%.  They also guided toward the possibility of six more increases by the end of 2022.  These changes in policy stance have led to increased conversations about the future...Read More

In several of the blog posts this year, we have been discussing our view that the rate of change for inflation will likely decline in 2022 compared to 2021 despite the increase in energy and other related commodities (here, here, here).  Our view was based on the combination of more difficult comparisons for consumer prices...Read More

One of the economic impacts of the recent military events taking place between Russia and the Ukraine has been a large increase in commodity prices (energy and some metals and agriculture).  This has been especially true for carbon-based energy prices in Europe that are dependent on Russia and commodities that are produced in the Russia/Ukraine...Read More

When the last Consumer Price Index (CPI) report was released, we wrote an article highlighting that although the year-over-year rate of change increased, other indicators were suggesting that investors did not expect that trend to continue.  Ahead of the next CPI update, we wanted to review the comparison set for some of the areas that...Read More

The year-over-year comparison set for economic data, especially consumer related data, is going to become more challenging starting in the month of March.  This is driven by a combination of weak data during 2020 leading to very high year-over-year growth in 2021 and fiscal stimulus boosting income and spending data.  We think that the year-over-year...Read More

The Consumer Price Index (CPI) for January reported a monthly increase of 0.60%, the same increase as December and lower than the increase in October and November.  The year-over-year change increased from 7.1% in December to 7.5%.  This increase in price measures is not being corroborated by other market signals and could end up being...Read More

Oil prices (West Texas Intermediate or WTI) have increased 40% from the low in early December 2021 to the highest level since 2014.  Source: Koyfin. This may lead to an increase in the monthly growth rate of inflation measures like the consumer price index (CPI) and the producer price index (PPI).  At the same time,...Read More