At Business Insider, we love the monthly Jobs Report.
The Jobs Report is the Super Bowl of economic data releases, because it contains a wealth of information that’s of major significance to the market, the Fed, politicians, and the average Joe on the street. That last part is significant. There aren’t many data releases that anyone besides market folks care about it. But everyone cares what the unemployment rate is, and whether it’s going up or down.
But for the time being, we think the Jobs Report has a new rival, in terms of significance, and that’s the CPI report.
The single biggest question right now in the economy is whether inflation is breaking out for real. That would be a signal that we’ve kicked into a higher gear and whether the Fed will face pressure to raise rates sooner than later. That’s the topic on everyone’s mind, and that’s the one thing that could get markets nervous.
Earlier this week, Core CPI (that is, excluding volatile food and energy prices) had their biggest monthly jump since 2009.
That one number caused sizable moves in emerging market currencies and short-term US interest rates, as traders wondered whether it would presage a more hawkish Fed.
In the end, the Fed would not be unnerved. On Wednesday, Janet Yellen gave no indication of a more hawkish bent coming to the Fed.
But the story hasn’t changed. There’s growing evidence that inflation is picking up. The latest came yesterday from the Philadelphia Fed manufacturing report, which showed a big jump in the Prices Paid Index for manufacturers (meaning their input costs are rising).
This chart from Mike O’Rourke of Jones Trading shows that index against an inflation measure.
This is the big question in the economy right now, and so for now, CPI releases shall get elevated to the significance of Jobs Report until the question is answered.
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