DoubleLine’s Jeff Mayberry and Samuel Lau get ready for Flag Day (June 14) with a rundown of the June 7-11 market week in which a strong CPI print was delivered, and the S&P 500 continued to climb. A dip in the 10-year yield in the face of the 5.0% rise in the CPI leads Jeff and Sam to speculate that the U.S. Treasury market has decided not to fight the Fed and has joined the “inflation is transitory” camp. Jeff and Sam try to add some insight into the transitory-inflation debate with a look under the hood of the CPI as the question of the week (starts at 14:32). They use the Federal Bank of Atlanta’s component categories of sticky (dependent on the frequency of price changes) and flexible (dependent on current economic factors and, thus, definable as transitory). Not surprisingly, they find whether components qualify as sticky or flexible is open to debate.
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