Markets are bizarre.
Consumer prices were up 5% in May — the fastest pace since the summer of 2008. Core inflation rate was up 3.8%, the biggest increase in about 30 years. Even food companies say their costs are on the rise, forcing many to pass the cost on to the consumer. “The inflation pressure we’re seeing is significant,” General Mills Chief Executive Jeff Harmening as quoted by The Wall Street Journal. “It’s probably higher than we’ve seen in the last decade.”
Yet, the markets are flying high today.
All because the Federal Reserve is still dismissive of the inflationary threat.
In fact, “Central bank officials believe the current rise is due to temporary factors that will abate as the year goes on and look higher because of comparisons to the year-ago period, when much of the economic activity remained restricted due to pandemic precautions,” says CNBC. Even Goldman Sachs says inflation is transitory, added CNBC.
What’s amazing is that markets have been terrified of this number.
The Dow even dropped 150 points yesterday on the fear. Now that the number is out, no one cares it was far worse than expected. That’s amazing.
The post Why Markets Are Shrugging Off a 5% Jump in Consumer Prices appeared first on Morningology.
