First, here is the Silver-Gold ratio, which simply must bottom if commodities and the inflation trade are going to get a boost.  It is no coincidence that commodities are on a tiny bounce along with the same situation in the Silver-Gold ratio.

Next is the TIP-TLT (inflation protected vs. unprotected Treasuries) ratio, still burrowing southward…

Finally, here are Mike Ashton’s post-CPI thoughts…

• Weak cpi: 0.1%, core +0.1%. Unrounded core was +0.096, so it rounded UP to 0.1%. Y/y core stayed at 1.9% but just barely: 1.85%.
• That’s a real surprise since virtually all signs had been for higher core going forward. Breakdown will be interesting.
• Core svcs y/y slipped to 2.6%; core goods fell further to -0.3%. Leading indicators on both still point higher though.
• Accel major groups: Food/Bev, Housing (56.3%). Decel: Apparel, Transp, Recreation, Other (29%). Unch: Med Care, Educ/Comm (14.7%)
• Primary Rents 3.28% from 3.15%. OER 2.72% from 2.64%. No danger of inflation declining while these are rising strongly.
• Dramatic fall in airline fares: from 5.34% y/y to -0.25%.
• Airline fares are only 0.74% of the basket but that took 0.04% from headline and 0.05% from core.
• Big move in one item suggests median CPI won’t fall, though I haven’t yet done the math. In any event, number not as weak as I thought.
• Medicinal drugs 3.12% from 3.00%. Med equip/supplies 0.2% from -1.08%. Much of this is unwind of sequester effect last yr.
• Easy comparison next month means core will be back to 1.9% in August, chance of 2.0%. It needs to converge with median!
• I think Median CPI might actually accelerate today from 2.3%, based on my rough calculations.

The initial headline was a bit of a shock, as it looked very weak. But as I looked deeper into the numbers, it didn’t seem nearly as weak as I had first thought. To be sure, this is not astrong report, but the seeming weakness came largely from one component. The most-important components (and the ones with the most inertia) are the housing pieces, and those are moving strongly ahead.

When I did my calculations of the median CPI (I don’t do it the same way as the Cleveland Fed does it), I came up with a decent rise over last month’s figure. That is to say that mostcategories continue to see accelerating inflation. We will see if the Cleveland Fed agrees, but an uptick in the median CPI (which was 2.3%, unchanged, last month) would go a long way towards removing any sense that this was actually a weak figure.