After a worrying 0.5% jump in January, headline inflation as measured by the Consumer Price Index increased by just 02.% in February. That was right on the 0.2% mark expected by economists surveyed by Briefing.com. Core inflation, which excludes more volatile food and energy priced, rose 0.2% in February, again right at economist projections, after a 0.3% rise in January.
Headline CPI (Consumer Price Index) inflation climbed 0.5% in January, the Labor Department announced today. That was above the 0.4% increase expected by economists surveyed by Briefing.com. Core CPI, which excludes more volatile food and energy prices, climbed 0.3% in January. Economists surveyed by Briefing.com had expected a 0.2% increase.
Investors and traders don’t have just the volatility from the CPI inflation report tomorrow to worry about. An unexpectedly strong or weak inflation report could send stocks and bonds soaring or tumbling. There’s also the expiration of options on the CBOE S&P 500 Volatility Index (VIX) tomorrow.
After getting their heads handed to them when volatility rocketed to 37.32 on the VIX on February 5 from 11.33 on February 1, low volatility traders were back today betting the the CBOE S&P 500 Volatility Index (VIX) would continue its fall from 25.61 at the close today. That’s another drop of 11.87% today. After that 230% move to the upside, which resulted in some low volatility ETFs recording 90% losses, the VIX is down 31.4% from its February 5 high.
The big, market-shaping news will be the CPI (Consumer Price Index) inflation report before the market opens on Wednesday. Since this decline began on February 2, the driving fear has that the stimulus in the Tax Cuts and Jobs Act, first, and now the $300 billion in new higher spending in last week’s legislation to fund the government for the next two years, and the still pending $200 billion in new money from infrastructure would kick off higher inflation in an economy that may (and this is a key area of disagreement among economists) be already running at full capacity.
In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don’t justify a full post. I’ve decided to start compiling these notes here each day in a kind of running mini blog that I’m calling Notes You Need. A typical item is much like this from today: “10:20 a.m.: Â Intel (INTC) will cut payments under its “Intel Inside” program by 40% to 60%, according to CRN.com. Intel Inside darts to 1991 and paid OEMs and channel partners to mention Intel’s brand on products from PCs to workstations. CRN.com says that Intel will use some of the funds from this cut to invest in its data center business.”
Both the headline CPI and the Core CPI are now above the Federal Reserve’s inflation target of 2%. The year-over-year increase in the headline CPI now shows the largest 12-month increase since the period that ended in June 2014.
