Late cycle inflation: Fed rate hike, higher YoY CPI

Last week I wrote that I expected typical late cycle inflation to be the story of 2017.  Yesterday’s .25% rate hike by the Fed and this morning’s CPI reading for November play into that scenario. Yesterday’s rate hike drove yields on the 10 year Treasury to 2.57% intraday, and this morning they went as high as 2.62%.  This is higher than in 4 of the last 5 years as shown in the below graph, which subtracts 2.50% from yields:   This is NOT a sign of short term weakness, since the yield curve has been widening:   But mortgage rates…

Source: XE news feed
Late cycle inflation: Fed rate hike, higher YoY CPI