There was white smoke over the Bureau of Labor Statistics, sort of, on Wednesday morning. The key measures of consumer price inflation for April confirmed expectations for a slight decline, and alleviated growing anxiety over a possible reacceleration. Risk assets across the world spent the rest of the day exhaling deeply.
The numbers could easily have been worse, and after a month in which prices had discounted growing risks of inflation the direction of travel on markets made total sense. Plainly bond yields should come down a little in these circumstances, while equities are reinforced. It is, however, reasonable to question whether these numbers were any kind of a turning point in the battle against inflation.
To start, this beautiful chart generated by Bloomberg Economic Analysis breaks CPI into four major components; food, fuel, other goods, and other services. Two years ago…
