MBS Day Ahead: CPI is the New NFP, Sometimes


Posted To: MBS Commentary

A majority of market participants (or their mentors) were steeped in the extraordinary inflation/rate volatility of the late 70's and early 80's. As the recovery from the financial crisis began, and as the Fed was pumping trillions of dollars back into the system, these market participants thus had an unhealthy fear of every little uptick in inflation at first. As reality unfolded, we've seen that worrying about inflation was a waste of energy at best, and a fool's errand at worst. I know I had a great time making fun of them from 2011-2015 at least. Things began to change in late 2015. Inflation began a quick and unequivocal return to relevance as core CPI shot up from a steady, depressed state at 1.6-1.7 to 2.3% by Febraury 2016. Had it not been for Brexit, we likely would…(read more)

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