US DATA: CPI Inflation Breadth Widened Further In August
Our calculations show a further widening in inflationary pressures in August, on a headline but also notably both core goods and core services basis.
- 42% of approximately 190 items across the entire CPI basket saw inflation in excess of 3% Y/Y in August, the highest share since Nov 2023.
- It’s up from 37% in July, extending increases from 29% in April and a recent low of 28% in Dec 2024. It compares with an average of 24% in 2019 or 19% through 2015-19.
- Shares of those with sharper inflation rates are increasing as well, with 27% seeing >4% Y/Y inflation (vs 25% in Jul and 19% in April).
- Notably, the core goods equivalent has unsurprisingly increased strongly in the past two months but core services has also extended a recent bounce.
- Specifically, 30% of core goods items are running at 3% Y/Y or higher, after 24% in Jul and 14% in April. This averaged 18.5% in 2019 or 12% through 2015-19. As the charts show though, this should be seen in the context of post-pandemic surges when this share peaked at ~75%.
- 64% of core services are running at least 3% Y/Y, after 62% in Jul and 50% in April. This averaged 38% in 2019 or 34% through 2015-19. It’s a volatile measure but the recent uptick has been sizeable.
- The official measure of core services inflation doesn’t show this renewed uptick yet, with five consecutive months at 3.6% Y/Y.
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- EUR/USD: Aug14 $1.1590-00(E1.8bln), $1.1625-35(E898mln), $1.1645-50(E1.2bln), $1.1695-00(E4.5bln); Aug15 $1.1590-00(E1.1bln); Aug18 $1.1560(E1.1bln)
- USD/JPY: Aug14 Y147.00-20($1.2bln), Y148.15-30($945mln), Y155.00(Y1.6bln
- GBP/USD: Aug14 $1.2975-00(Gbp1.2bln)
- EUR/GBP: Aug14 Gbp0.8690-05(E1.1bln)
- AUD/USD: Aug14 $0.6600(A$1.3bln)
- USD/CNY: Aug15 Cny7.5000($1.7bln)
US TSYS/OVERNIGHT REPO: SOFR Softens Slightly, Potential Pickup Ahead
Secured rates were a little softer Monday as was broadly expected, with SOFR edging 1bp lower to 4.34%. Other major secured rates and effective Fed funds were unchanged.
- As we noted yesterday, pressure could pick up later in the week on Treasury auction settlements. These include $55B in net cash raised by bills today, and a further $42B on Thursday, followed by $35B in coupon settlements Friday.
REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.34%, -0.01%, $2796B
* Broad General Collateral Rate (BGCR): 4.33%, no change, $1173B
* Tri-Party General Collateral Rate (TGCR): 4.33%, no change, $1137B
New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume: $115B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume: $263B
US: BLS Commissioner Nominee Antoni Suggests Suspending Monthly Payrolls Report
Fox Business has published an interview with E.J. Antoni in which the White House's nominee as the next Bureau of Labor Statistics commissioner suggests that the monthly Employment Situation (ie nonfarm payrolls) report should be "suspended":
- "Until it is corrected, the BLS should suspend issuing the monthly job reports but keep publishing the more accurate, though less timely, quarterly data... Major decision-makers from Wall Street to D.C. rely on these numbers, and a lack of confidence in the data has far-reaching consequences."
- He adds: "How on earth are businesses supposed to plan – or how is the Fed supposed to conduct monetary policy – when they don’t know how many jobs are being added or lost in our economy? It’s a serious problem that needs to be fixed immediately."
- This interview was conducted on Monday, before Antoni's nomination by the President. Though it's notable he "told FOX Business that he doesn’t believe the jobs data was intentionally manipulated, as some have suggested, but instead argues that persistent flaws in the Bureau of Labor Statistics' methodology have gone unaddressed."
