If you floored the gas pedal in your car, the acceleration would be quite apparent. As your speed climbed higher and higher, though, the rate of acceleration would eventually decline until you reached your car’s maximum speed. No longer accelerating, you would still be traveling at an unsafe speed.

Inflation is a lot like that. No longer picking up speed as quickly, price levels for the things we all need – shelter, transportation, medical care, food, etc – are still quite high. The average American won’t be too excited about CPI (just a measure of year over year price changes) if he still can’t make ends meet.

This is why consumer confidence, due out at 10am ET, is so interesting at a time like this.

continued for members…

We’re getting another small dip in the leadup to the open. But, keep an eye on VIX, which is still hovering near multi-year lows. Aside from VIX, EURUSD and USDJPY are still the only factors driving stock prices. Oil and gas prices are hovering near recent lows as though they’re going to break down, but they haven’t broken down. It’s just enough in the appearances department to keep some pressure on 10Y yields. Of course, we have another of those big ($55 billion) 7Y auctions today, so stay tuned.The 10Y is still thinking about breaking down, as is the 2s10s.