This was the inflation report that Chair Warsh was dreaming about. Soft underlying inflation and details motivated a slightly lower US 2-year Treasury yield. Markets may be holding back in their reaction perhaps because escalating tensions in the Middle East are overshadowing data with conflict and supply chain challenges likely to persist. Core CPI inflation at 0.21% m/m SA climbed down from a gain of about double that the prior month, indicating little to no sustained pass through of the energy shock into underlying inflation. Chart 1 shows the annualized m/m changes. Breadth improved ever-so-slightly with a touch ... (full story)