Market Insights: U.S. core inflation

U.S. core inflation 

We recently saw a comment from Societe Generale's global strategist Albert Edwards that we found intriguing.  He noted that the U.S. Core Consumer Price Index (CPI) is much closer to a deflationary level than most believe.  His argument is that if the U.S. calculated inflation the same way the Eurozone does, then the U.S. is right in line with them and actually closer to zero.  He is confident that U.S. 10-year yields are headed to below 1%.  We are not so sure on that, but this is no doubt an interesting viewpoint nonetheless.

 

Source: Societe Generale, Mauldin Economics

He goes on to point out that if you alter the annual rate to a 6-month rate, the U.S. core inflation rate is now actually negative (using the Eurozone definition).