Gary Thayer
Gary Thayer
appear core costs declining energy federal fuel good inflation news passed prices reserve rising risk slightly
So core inflation is still rising slightly but doesn't appear to be a problem, and I think this is good news for the Federal Reserve . With energy prices declining it reduces the risk that fuel costs will be passed on to consumers.
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(The data are) suggesting the decline we've seen in the dollar over the last couple of years is not having an impact. It suggests the dollar may still need to fall to help narrow the trade deficit. But there's a risk to higher inflation if it does.
buyers levels looking risen risk willing yields
Yields have risen to levels where buyers looking for yields are willing to take a risk and buy.
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Inflation is creeping up, but it's not out of hand. I think that's pretty important. The bond market may have discounted a worst-case scenario over the last couple of months on inflation, and now maybe traders won't have to worry about the Fed moving too fast.
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It's still a good reading overall, but not quite as robust as we've seen in the last several months. The encouraging thing is that the employment component increased again. We are beginning to see businesses becoming a little more willing to hire.
create gets good news problems situation sort
It's sort of a good news-bad news situation though, because if it gets out of hand, it can create other problems for the economy.
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The big number is the employment number on Friday. If that number comes in weak for the third consecutive month, views on the Fed are likely to change significantly.
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The bond market liked the inflation data. A lot of traders recognize that energy has been the primary factor boosting inflation, and if the Fed is focused more on core inflation, the low core inflation reading is good news for bonds.
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The bond market had been thinking that the weak economic numbers that we've seen would cause the Fed to think twice about raising rates,
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These numbers show the economy is indeed in recession, and they leave the door open for the Fed to cut rates again.
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These numbers look as if there's no urgent need to raise interest rates much further.
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These numbers are slightly dated, but they show that the inventory liquidation period is over, and that (the) drag on the economy is probably behind us.
consumers convinced economy fact improved reflecting
It's not a big drop. It's reflecting the fact that the economy has improved this year, but not enough that consumers are convinced things are sufficiently better.
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The Fed will probably not put a lot of emphasis on this data and instead will be looking more at the economy after the hurricane.