CPI came in at 0.1% ex-food and energy which was much lower than the 0.3% analysts expected.  Despite soaring energy prices we continue to see very benign inflation readings.  Core CPI was also 0.1%.

As we suspected, the reflation trade is well ahead of itself.  The signs of inflation are simply non-existent.  While we’re seeing record amounts of money printing, the money just isn’t entering the economy.  M1 multiplier is stable after a multi-month cliff dive.  Expect this trend to continue in the coming months.  The bond market is obviously loving this news after a much undeserved beating over the last few weeks.