Fed’s Tightening Campaign: One Pork Chop That’s Likely Grounded (Seeking Alpha)

February 22, 2010

The CPI release on Friday amply demonstrated why inflation trading folks tend to ignore PPI. The PPI figure had scared people into thinking that the rise in consumer inflation, long-awaited (and coming!) was nigh.

It wasn’t. Headline CPI rose+0.2%, but the miss was entirely due to the miss in core inflation. Core CPI at -0.1% missed the consensus guess by a full two-tenths, which is a bit like a three-touchdown favorite losing by two touchdowns: it happens, but not very often. I, however, was delighted, since the model I follow had been giving a much lower central tendency to the year-on-year number.  For more, see Fed Tightening.