Transcription
The CPI numbers may really be. Steve Liesman joining us now with more on this story, which is going to get some attention, Steve, because, you know, questioning the data is like a thing.
It is, but not for political reasons, for methodological reasons, Brian, to use a very large television word. Stocks, as you say, they're loving this muscular inflation report. But the bond market and economists are pretty skeptical, with many saying changes to the data gathering process and some of the methodology may have distorted the numbers.
RSM Joe Buswell says, dude, that was one flawed report. Oxford says encouraging signs of disinflation. But something feels off. And Pantheon says data collection issues means trends will only be clear in December.
Economists have raised questions about the sharp drop in housing costs, as well as whether the survey, limited to the second half of the month, might have overweighted for holiday discounts. Morgan Stanley writing the BLS might have carried forward prices in some categories, effectively assuming zero inflation. If these technical factors are the main source of weakness, we could see re-acceleration in December.
CBC contacted the BLS on these have not issues. We heard back yet. If it's accurate, it might suggest the inflation decline. Not as much as indicated, but still maybe perhaps under control.
Take a look at the two year yield actually rose, a sign the bond market wasn't buying this big change in inflation, and that the Fed would be easing sooner than expected. You can see the two year rally a lot of up and down there on the left side of your screen and sold off modestly since the number was announced. A little bit of a two point rally this last couple of hours. So Fed probabilities also unchanged. The 24% probability. So the market not saying hey this means the Fed's going to cut in January. A little bit more probability of one in March, a little bit less in April than it was. Pretty sure that we'll have that second cut by June.
Irony of all this inflation is probably in, housing is probably declining, and it takes a while for those declines to show up in the CPI. But this looks to be too much too fast to be credible. So be excited about this Brian. Just not so much right now. Be excited. Also about the interview we have tomorrow morning with John Williams, the New York Fed president, exclusively on CNBC. At 8:30 a.m. Kelly.
But I want to be clear. So this is not like remember the late Jack Welch, those Chicago guys questioning the jobs data then when we had Biden in office? We had someone on the right say, oh, these numbers are just made up. They're all fake. That's not what we're talking about here. You're saying this is a I'm not sure I can say it methodological.
Yeah, I think I got that right. A trouble with how they put the numbers together, Brian. And basically they didn't have all the data they, they normally get. They used some fill ins. And the fill ins they use are what bothers people. They didn't necessarily show inflation. They might have carried a zero over. Also, the idea that they only gathered prices in the second half o