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Saturday, August 13, 2022

Updates on recent economic indicators. - Part 2

The US CPI has slowed in July but it is still at an elevated high (8.5%).

CPI breakdown:

We can see that the main CPI factors are energy and food which are daily necessities for the americans. 

The PPI has also declined to 9.8% which is in line with the CPI.

The declines in CPI and PPI are not surprising because demand destruction has already happened.  Thus, these declines have boosted the US consumer sentiment because the consumers are expecting the US FED to rein in its rate hikes.

However, the treasury curve inversion is getting worse because investors are feeling gloomy about the long-term outlook.  The long-term chart below was showing that recessions always occurred whenever curve inversions happened.

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