7 of the strongest signs I’ve seen that inflation has peaked and we are headed for disinflation 🧵
1. The 10-year yield has dropped like a rock this year. The market is expecting rates to come down.
2. The US Dollar Index $DXY has dropped too. Lower inflation leads to lower rates, which lowers demand for the US dollar. The market is pricing in that dynamic now.
3. The producer price index (PPI) fell 0.5% in December. This means wholesale prices are coming down, which leads to a decrease in retail prices.
4. CPI fell 0.1% month-over-month in December
5. The rate of change in CPI year-over-year is falling
6. The labor market is slowing. Wages decreased very slightly in December.
7. The 2 year/10 year Treasury yield spread is decreasing. The yield curve is becoming less inverted.
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