CPI Holds Steady...For Now

CPI increased 0.3% MoM and 1.4% YoY in January – buoyed by a 7.4% increase in the price of gasoline which almost single-handedly accounted for the 3.5% monthly increase in energy prices. Without food and energy to bolster it, core CPI was unchanged in January and showed a 1.4% increase YoY.

The Fed has its work cut out for it. Energy prices are still down YoY, but that is about to change dramatically when the March-April price plunge is factored in. As we’ve discussed many times, the data points to a surge in CPI to well over 2% unless gas prices correct substantially in the coming months. Futures spurted slightly higher, not on the CPI data……but in response to the signals VIX continues to send the algos. Every dip below the white channel bottom has resulted in a new high for ES.continued for members…