Pro Perspectives 9/6/23





Please add to your safe senders list or address book to ensure delivery.

September 06, 2023

We talked yesterday about the sharp bounce in yields, from Friday's lows.  
The climb continues today.  And at the highs of the day (4.30%), we are now nearing (for a third time) the post-pandemic era highs.
At the same time, oil prices are (again) on the move.  
With both in mind, we'll get the August inflation report next Wednesday
And as we discussed heading into July report, a powerful driver of falling inflation (the fall from over 9% to 3%) has been DEFLATION in energy prices.
You can see in this graphic below from the Bureau of Labor Statistics …
That deflation in the energy component was brought to us by supply manipulation from the White House (via the near halving of the Strategic Petroleum Reserves, SPR).  
Now it's time to restock.  And not only has that SPR card been played, but as we've discussed the past two years here in my daily notes, the Western world's war on oil has put OPEC and Russia in the driver's seat.  Not suprisingly, they have been, and will continue to hold production down, and they will ultimately dictate the price we pay for oil.  And it will be a very high price.
That said, this return of rising year-over-year oil prices, within the inflation data, will not be in next week's report (the August CPI report).  
If we look at the price records from the EIA (Energy Information Administration), these August prices are still being measured against a high base of August 2022 prices ($94 oil, $7.28 natural gas, $4.08 retail gas).