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CPI Report

John19
  |     |   397 posts since 2022

In November, the Consumer Price Index for All Urban Consumers increased 0.1 percent, seasonally adjusted, and rose 7.1 percent over the last 12 months, not seasonally adjusted.

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Listedguru
  |     |   63 posts since 2022
So 50bps is a done deal for the fed tomorrow so I guess the question becomes does the fed push back via the dot plot and the Powell presser? Bloomberg is saying the Swaps market lowered the terminal FFR to 4.88% now. Yields are getting crushed. Not looking good for lt cd rates unfortunately...
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sams1985
  |     |   781 posts since 2022
I’ve been trying to be more rational but i can’t imagine how this isn’t a nail in the coffin. This may kill the FFR dot plot.
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John19
  |     |   397 posts since 2022
To buy at 4.25%, or not buy at 4.25%? Any suggestions?
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Choice
  |     |   937 posts since 2020
And fuel was way down…didn’t need to start new drilling for short term relief. Inflation was down from previous month. (Some need a new calculator or pencil). The Fed will clearly think it’s turned the tide. Consequently those that disliked inflation and clamored for higher CD rates better rethink that rejected strategy.  CDs rates for long term are going down…the party is over!
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NFO
  |     |   66 posts since 2022
Lots of things can drive the near-term cost of fuel down or back up. I doubt the Fed governors believe that inflation is licked at 7%. Lots of people not believing the Fed's intentions. Historically, that's a bad plan.
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Listedguru
  |     |   63 posts since 2022
At this point I'm going to see what the fed dot plot looks like tomorrow and what the fed statement and Mr. Powell has to say. Even if Powell leans hawkish (which I think he will) does the market even listen or just blow it off? The market seems to be indicating that the terminal FFR is going to land in the 4.80ish% range now after today's CPI numbers. It's interesting that the core CPI that Powell always mentions came in much better than expected especially when the shelter component of that Core CPI# is stripped out (shelter is a very laggy indicator). So basically goods inflation is coming down quickly and that basically leaves us with wage inflation which might tend to be a little more sticky.

Like I've mentioned previously the high is in for rates IMHO. I am still holding out hope that maybe we get a little bump up in lt cd rates here into the end of the year after tomorrows 50bps hike but I guess we'll see. For sure saving accts and rates on other st products should head higher after the hike tomorrow but not looking great for lt cd's.
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sams1985
  |     |   781 posts since 2022
At this point, i don't think there's any harm left in waiting. Savings account rates are creeping up above 4%. In what world will long term CD's fall below savings account rates??? Rates may not go up but i also think we've hit the bottom support.
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John19
  |     |   397 posts since 2022
Glad I didn't jump at 4.25%. Barclays and Sallie Mae will be up next. 5% still very possible.
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Listedguru
  |     |   63 posts since 2022
John19,

So your thinking like Barclays and Sallie Mae will be hiking 5 year cd rates soon? Yo mention 5% still very possible? I sure hope your right. Maybe Powell will really push back against the market today but even if he does will 'they' listen, lol.

I did see that Capital One increased their cd rates and their 5 year went from 4.25% to 4.40% which is the first increase in lt cd rates from a big bank in quite some time. Let's hope the others at least follow suite (and hopefully leap frog Captial One)
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sams1985
  |     |   781 posts since 2022
Yes, looks like non-brokered CD's are in fact following the FFR and not responding to the falling treasury yields...otherwise after all the noise from the last few weeks, Cap One would have lowered the 4/5 year rates or left them unchanged.
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NFO
  |     |   66 posts since 2022
Higher rates currently exist. If you're waiting for your particular bank to raise rates, that could still happen. However, there is an opportunity cost to waiting. How much that cost ends up being depends on your current yield and how long you have to wait for your goal. Keep in mind that, six months ago, 4.25% looked pretty good.
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fred_b
  |     |   172 posts since 2022
So the sky is falling? We have a big risk on market rally today. Let's see what the Fed dot plot looks like tomorrow and how the FI's react with CD rates.

I agree it's smart to buy some 5 year CD's now if you didn't get them a month ago because 5 year rates might fall. But I'd keep some powder dry.  The economy may be a lot more resilient in the face of rising rates than many expect.

Also, inflation may be more persistent than current trends indicate.  China is starting to loosen its zero COVID policy, so demand from China will start to ramp up again and that will contribute to commodity inflation.

Have a look at the huge wage increases going to airline pilots and rail workers.  The fat lady has not yet sung on inflation trends.
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Listedguru
  |     |   63 posts since 2022
I agree the one thing that might prolong the fed hiking rates would be wage inflation but in the end I'm not sure that'll be enough. Ready lots of reports this morning about the fed going 50bps tomorrow and then maybe one more final 25bps hike in Q1 of 23 and that's it. Hopefully that's not the case and the dot plot and Powell push back on that thesis.
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John19
  |     |   397 posts since 2022
If you plan to buy Sallie Mae CDs, it can take a few days to set up the account. It might be a good idea to open accounts you plan on having CDs with to avoid any nasty surprises or delays.
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Fussybob
  |     |   16 posts since 2022
When you start the Sallie Mae CD application it locks in the rate at that time. Yes, it takes a few days to complete the application and fund the CD, but that rate is locked in. I just bought another CD with them today and that second time process is much quicker. I'm leaning towards the 5 years+ CDs reached their peak in November. I laddered in 4.25 -5% CDs so I'm averaged in at about 4.4% and content with that. I have some money to still invest and will probably go with 2-3 year CDs which should have rate increases after tomorrow.
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John19
  |     |   397 posts since 2022
You can buy the first CD at account opening. But I'm not sure if you can buy more before the account is fully set up. You may be able to, by going through the same process as when you bought the first CD. I like the Bread Financial CDs also. Easy to open.
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Robb
  |     |   324 posts since 2018
We saw another strong fade or rejection at our 4,100 macro downtrend line area on the SP 500.

Bring on the Fed!
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John19
  |     |   397 posts since 2022
On a side note, the SouthernGirl GTE method DOES work!
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CDsuckers
  |     |   70 posts since 2022
The non-seasonally adjusted CPI-U was actually -0.1 percent. Yup, that's deflation. It's the one that used to calculate the TIPS principal adjustment. A few month's back the same thing happened. We'll have to see if it sticks this time around.
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Listedguru
  |     |   63 posts since 2022
I actually read the CPI ex shelter was also deflationary as it came in this time at -0.13%. I think Powell has mentioned looking at CPI ex shelter closely recently as the shelter data that shows up in the CPI is very laggy. Most of the more real time metrics used for shelter have been showing big slows downs in the shelter inputs that will start showing up in the CPI in the coming months ahead and pushing down CPI even faster.
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MAKNYC
  |     |   324 posts since 2015
Be happy! According to the government beancounters your health insurance cost dropped 4.3% MoM from October after Octobers drop of 4% MoM from September! Taking a poll….who out there got a letter from their insurance company lowering their premium .01 or more in October or September?
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Listedguru
  |     |   63 posts since 2022
I read that they changed the way they figure the health component in the CPI thus the huge drops in that category we've seen over the last two months. I think it's calculated differently in the PCE yet so no distortion in the medical category in the PCE like there now is in the CPI prints.

And to answer your question my rate for health insurance went up almost 20% for 2023:(
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Robb
  |     |   324 posts since 2018
Sounds like more financial engineering. Personally hard to trust either party these days as they all seem to be out for their personal interests.
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Kaight
  |     |   1,192 posts since 2011
Everything today is politicized to the max. Personally I have doubts about two things:

First, I question the sincerity of the Fed's 2% inflation target. OK maybe, and only just maybe, it was sincere prior to last month's election. But the American people announced, through their votes, that inflation is not the concern so wildly trumpeted everywhere prior to election day. This cannot have escaped the Fed's attention, though of course they are never going to admit it. And inflation is wonderful medicine for our national debt which the Fed must manage.

Second, I do not trust the CPI numbers emerging from our national bureaucracy. There is so much riding on such numbers. And there are so many bureaucrats today willing to seize any possible political advantage, even if it means cheating. They know certain sorts of scandals, even when made manifest, will be vigorously covered up and/or subordinated by the national legacy media.
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MAKNYC
  |     |   324 posts since 2015
In case you were not familiar with the convenient 'enhancements' to calculating CPI in the more recent years vs the 80's or 90's...(Imagine if the old method reporting +17% CPI was utilized today)

http://www.shadowstats.com/alternate_data/inflation-charts
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