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Inflation to Bond Yields to Equity Turmoil, Or “Which Data Reports Should I Follow?”

Back in the 1900’s, the Chicago Cubs had a trio of slick fielding infielders on their baseball team: Tinker at shortstop, Evers at second base, and Chance at first base.

This trio was immortalized in Franklin Pierce Adams’ poem, Baseball’s Sad Lexicon or Tinker to Evers to Chance. The trio was so good that it was assumed that a groundball hit to this infield was an inevitable out. Why even bother running down the first baseline?

That inevitability is playing out right now in the market, but rather than Tinker to Evers to Chance, I call it, “Renewed Inflation Expectations leads to Higher Bond Yields and finally to Lower Stock Prices.” That trio is a pretty solid fielding bunch. So to get a better grip on the market, it is worth staying on top of the various data releases that could spike inflation worries.

Below is a list of the primary reports that a good investor should follow:

Employment Report:

We all saw the impact of last week’s Employment Report. Not only is there data around labor markets, unemployment, but there is also information about wages (hourly earnings). It was this data point that sparked the market route.

CPI:

The granddaddy of all inflation reports. This reports measures inflation impacts on the consumer. Watch the Core CPI more closely than the headline number. The main CPI includes Energy costs which can increase volatility.

Producer Prices:

This report usually follows CPI by one day. It measures price impacts on manufacturers. It is thought to catch inflation before it hits the CPI.

GDP report:

This is the big one. This reports provides a measure of all goods and services being produced in the U.S. economy. Buried below the headline numbers is the Price deflator. This is a very closely watched indicator by the Fed.

Personal Income and Outlays:

This report will follow shortly after GDP, and will be scoured to look for hints of Incomes going up.

Employment Cost Index:

This monthly report will look at every nook and cranny of the labor market.

From this list it is apparent that multiple reports each month can raise inflation fears. This market is going to be driven by inflation fears for the next few months, so staying on these will be a big help.