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The Fed's got it right. Data going back to 1962 shows the 10-year Treasury yield is far more...

The Fed's got it right. Data going back to 1962 shows the 10-year Treasury yield is far more correlated with core CPI than it is with the headline rate, notes Matt Busigin. Since 1986, the Treasury/core rate correlation is even higher, getting pretty close to 1. The data also gives truth to the argument that energy and food price shocks (which affect the headline) are deflationary.
Comments (7)
  • Inflation is deflationary! You are blowing my mind...

     

    Are you saying that price increases in energy and food are a leading indicator to deflation or what?
    20 Aug 2012, 03:21 PM Reply Like
  • There is no argument but what the statistics are correct, but their interpretation might be varied. How does the correlation come about? Could exogenous policy goals drive the correlation, or is it in fact an autocorrelation, and endogenous? If the Fed can pursue an inflation goal via its policies, and it thinks it can, why are we surprised that CPI is driven by TNX as compared to core rates. The Fed thinks it tautological to even ask such questions...
    20 Aug 2012, 04:06 PM Reply Like
  • Post Hoc Ergo Propter Hoc.
    20 Aug 2012, 09:04 PM Reply Like
  • I am a swing trader.
    20 Aug 2012, 09:41 PM Reply Like
  • bot some tlt today at 121.17
    21 Aug 2012, 10:51 AM Reply Like
  • Correlation my foot. If increasing energy and food prices were really deflationary I'd eat my hat.
    21 Aug 2012, 12:09 PM Reply Like
  • I disagree with comment: "The Fed's got it right". They are just "puppets on a string" putting forth policies of the shadow government (the hidden elite).
    21 Aug 2012, 02:24 PM Reply Like
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