US CPI/PPI - 2025-06-10

A big beautiful beat for headline and core. Can the Fed stop hallucinating inflation now? If tariffs were making inflation, then why did the goods sector show outright deflation for the month? Headline and core, ex-OER, are both below 2% year-on-year now, and the Fed's target for them is 2.5%. Sharp deceleration in May for all categories except food. More than all the month's reported (and low) inflation was due to just 5 items out of almost 200. Going into next week's FOMC, the Fed can and should be more relaxed about inflation. But the reality is that all year the Fed has been targeting the stock market, tick by tick. To the extent that this good news keeps buoying stocks (as it is, as of this writing early Wednesday morning), the Fed will become more and more convinced -- and rightly so -- that rates are pretty much at neutral already.