10/12/2023: September CPI was 0.4% MoM

core CPI 0.3% MoM

September CPI report was out yesterday. Headline CPI MoM rose 0.4% vs. 0.6% in August while the core CPI MoM rose 0.3% in September vs. 0.3% in August. Headline CPI YoY rose 3.7% in September vs. 3.7% in August, 3.2% in July, 3% in June, 4.0% in May, 4.9% in April and 5% in March. Core CPI YoY rose 4.1% in September vs. 4.2% in August,. 4.7% in July, 4.8% in June, 5.3% in May, 5.5% in April and 5.6% in March. The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase. An increase in the gasoline index was also a major contributor to the all items monthly rise. While the major energy component indexes were mixed in September, the energy index rose 1.5 percent over the month.

TLT 0.00%↑ tanked 2.7% after the report. Inflation flatlined but still needs some more time to go to reach 2%. Higher for longer is for real now. Today’s 30-year treasury auction also saw weak demand and dealers had to take up 18% of the supply instead of the typical 11%. The federal government is issuing debt like crazy but it’s questionable if there’s sufficient investor appetite to absorb all the new issuances. Tomorrow JP Morgan Chase is going to report earnings and we are going to see how their unrealized losses look like after the surge of long-term yields. JPM 0.00%↑ is the cream of the crop. If they show any sign of weakness on their balance sheet, then we will need to worry about if the overall banking sector could survive this rate cycle.