Chart of the day: U.S. Consumer Price Index

I recently wrote a post about U.S. Treasury securities which have been rising in price as interest rates have come down. In the post, I called the Treasury rise a bubble and I stick by that moniker despite protests from some astute readers.

However, I do want to point out one reason why Treasurys are rising. Inflation.

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I recently wrote a post about U.S. Treasury securities which have been rising in price as interest rates have come down. In the post, I called the Treasury rise a bubble and I stick by that moniker despite protests from some astute readers.

However, I do want to point out one reason why Treasurys are rising. Inflation.

Non-Seasonally Adjusted CPI
Non-Seasonally Adjusted CPI
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Inflation is plummeting and that means inflation will soon become deflation. The U.S. Consumer Price Index (CPI) was released today, showing that inflation fell 1.9% in the last month alone. Prices are only 1.1% higher than last year at this time. In July that figure was 5.6%.

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To be sure, much of that decline comes from the drop in oil prices – the energy index fell 17% in November. Nevertheless, this inflation report is a clear signal that prices are plummeting and that the Federal Reserve has been powerless to stop the fall.

Certainly, this is a very good reason why Treasury prices are rising.

Source
Consumer Price Index Summary – Bureau of Labor Statistics

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