In my last publication, I discussed a weakening economy and a resulting higher rate of disinflation – we had made significant progress in cooling off inflation. In this piece, I will continue to highlight this progress, however such progress does come at a cost. The most recent CPI print for June came at a decline of 0.1% from May, putting the 12-month rate at 3%, around the lowest in more than three years. Excluding food and energy costs (often volatile costs), the Core CPI increased 0.1% monthly, which is a 3.3% increase from one year ago. This was the smallest annual increase since April of 2021.

Earlier this year, I published an article titled “Bank Failures, Bond Rallies, Inflation Softening”. In that piece, I covered failures in a handful of banks mostly due to irresponsible management of their bond portfolios and a weak venture capital backdrop (many customers of the bank were VC). The result was essentially a bank run as these customers needed capital, and a panic ensued from lack of such capital that the bank could make available while they sold heavily discounted bonds off their balance sheets to return capital to depositors. Not exactly a recipe for success or risk management.

Last June, I published an update piece to the publication titled “The Reality of Where We Are”. In those pieces was a very cautionary and bearish tone, one that identified a flattening (now inverted) yield curve (when short maturity interest rates are higher than longer maturity rates – almost always a tell-tale sign of recession) and a Federal Reserve that had a lot of catching up to do from way too loose of policy.