Will The Fed Read The Data?

Things have changed.

What was well in the green yesterday was back in the red today… And the Dow Jones Industrial Average has already clawed back most of the more than 200 points it was down again in early Wednesday trading.

So, things are choppy.

That goes for yields, too. We’re still well above 3% on the 10-year U.S. Treasury note, and the long bond is also still just below near-term highs.

But yields have backed up a bit this week, as the market weighs the implications of tighter money, trade wars, and innumerable other factors.

Consider, too, the latest batch of economic data.

September retail sales were up just 0.1% against an expectation of 0.6%. To make matter worse, August’s already disappointing 0.1% rise was revised lower.

And sales were actually down 0.1% if you take out volatile components like autos and gas.

Consumer spending basically drives our economy. As it was, replacement demand created by Hurricane Florence probably prevented a stronger market reaction and a much more dramatic move lower for Treasury yields.

I’m actually pretty excited because the trading system I use for Treasury Profits Accelerator doesn’t care about “direction.” I couldn’t care less if the market goes up or down. I want it to move.

And, amid all this activity, we’re going to see some opportunities to profit.

The ’Flation and the Fed

I do have a pretty good idea about the cause of this recent drama, but let’s look at recent inflation data first…

The Consumer Price Index (CPI) was up 0.1% in September, but that was well short of a forecast 0.2% gain. Year over year, CPI was up 2.3%, easing back from a 2.7% rise in August.

More important, “core” prices – excluding volatile food and gas components – were also up 0.1% against an expectation of 0.2%. Core prices were up 2.2% year over year, below a 2.3% consensus forecast.

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