Prices are heating up back up again.

CPI came out hotter than expected on last Wednesday, with the headline number (includes all items) rising 3.5% over the prior 12 months. That was higher than the previous months print of 3.2% and exceeded economists estimates of 3.4%

Usually, core CPI (excludes food and energy) save the “inflation is actually falling day.” But it failed to provide much needed positive talking point for the political class by showing an even higher increase of 3.8%.

PPI (that’s the price index of what producers, i.e., actual businesses pay) also rose 2.1% after several months of sub-2% gains.

Even mainstream media can longer hide the fact that fast food meals are no longer affordable.

But you don’t need statistics or news to tell you that inflation still bites.

I’m sure your wallet tells you all you need to know.

And markets know it too.

Reading Inflation Fears Through Markets

One way to gauge market sentiment is through Fed Funds Futures.

These contracts price in the odds of what level the Fed Funds Rate will be, currently at 5.25%, over the coming months.

These persistent inflationary pressures, plus continued economic growth and rising employment, have pushed hopes for rate cuts even further back on the horizon.

For June,trades are now 72.7% certain that rates will remain the same through June.

And July is basically split between staying put and a 25 basis point cut, with odds skewed slightly to unchanged.

Precious metals are screaming higher prices too.

Gold prices are at their highest price ever and up 15% from year end…

And silver has rallied 18%.

None of this bodes well for Biden’s inflation-fighting credentials.

Rising prices are now top-of-mind for many voters, Republican or Democrat. And the way markets are acting, it seems inflationary fears have settled in to investors mindset.

And consumers too.

Costco is now selling $200 million in gold bars each month. And with gasoline prices creeping back up too heading into summer’s peak driving months and oil pushing higher on geopolitical tensions, you can expect the stats, news, markets to reinforce the “inflation is back” theme as the hottest topic driving November’s elections.

There’s another market confirming this theme as well.

Crypto is on another tear.

Part FOMO. Part inflationary/instablility hedge, Bitcoin is pointing the way, up 62% so far this year.

Later this week, I’ll have a way for you to trade this FOMO/hedge combo.

So, stay tuned.

Because markets should never be ignored.

 

Until next time,

Tim Bohen

Lead Trainer, StocksToTrade

 

*Past performance does not indicate future results