From Bloomberg, that is probably why rates aren't dropping. pic.twitter.com/RnuipIIgJo
— Michael J. Kramer (@MichaelMOTTCM) January 14, 2025
Hey @federalreserve… Core PPI bottomed in July, and continues higher. Where's the 'progress on inflation' you keep talking about? Are you not simply misleading the American public? This isn't progress – i.e., higher Core PPI every month since Jul. is the OPPOSITE of progress. pic.twitter.com/w3m3uGXg1N
— Gordon Johnson (@GordonJohnson19) January 14, 2025
Something doesn't add up here:
Today, PPI inflation data came in BELOW expectations but the 10-year note yield hit a new 14-month high of 4.82%.
Many are confused, doesn't lower than expected inflation mean lower rates?
Bond markets are concerned. Let us explain.
(a thread)
— The Kobeissi Letter (@KobeissiLetter) January 14, 2025
This morning, December PPI inflation came in at 3.3%, which marked an increase from November.
However, it was below expectations of 3.5% while Core CPI rose to 3.5%, below expectations of 3.8%.
As seen below, the 10-year note yield surged on the news.
Why did this happen? pic.twitter.com/kpkG7io2vY
— The Kobeissi Letter (@KobeissiLetter) January 14, 2025
First, take a look at 30-year REAL yields.
This is the yield AFTER accounting for inflation.
Since rate cuts began in Q3 2024, real yields are up over ~50 basis points.
If real yields are rising, it's clear that there are other major drivers of rates than just inflation. pic.twitter.com/FUBwBwHl96
— The Kobeissi Letter (@KobeissiLetter) January 14, 2025
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