At 6.81%, headline inflation is now the highest it has been since March 1982 (6.78%.)  Originally driven by sharply rising oil and gas prices…

…it is now broad-based and anything but transitory, with medical commodities the only category below the Fed’s original 2% target.

Algos responded with the usual VIX smackdown which, not surprisingly, began one minute before the BLS release.

It remains to be seen, once the market opens, whether carbon-based investors will be so enthusiastic about the prospects of a quicker Fed taper.

For history buffs and those with fond memories of price discovery, note that the Mar 1982 CPI of 6.8% saw the 10Y yielding 14.2%, a far cry from today’s 1.5%.  It’s a testament to just how broken the bond market is.

continued for members…

The equity picture:

The key today will be whether VIX, now 45% off its recent highs, drops through its 200-day moving average. The SMA50 is only .37 away from dropping back through its SMA200. Currencies are on the sidelines this morning, essentially flat. Gold and silver are up very slightly – not such great inflation hedges these days… Oil and gas continue their bounce. As we’ve discussed recently, they should remain range bound for the immediate future as YoY comparisons bleed off and allow CPI to ratchet back down to a 2 handle by the time the taper is over. The bond market barely reacted to the news. UPDATE:  1:00 PM

A 13% drop in VIX, finishing below the SMA200, produced a 0.95% move in SPX. Par for the course, it suggests that huge inflation prints aren’t the least bit concerning. And, coming at the end of the day, it dares traders to take a position that’s difficult to hedge.

BTC managed to hold its SMA200 again today.

Have a great weekend everyone.