The CPI report on Thursday might be a snoozer hitting expectations of 0.2 percent. If it comes in higher, bears might gain an edge on the market by looking at the Cleveland Fed’s model and crude oil moving forward.
Nowcasting
I’ve been following the Cleveland Fed’s Inflation Nowcasting model for the past year. It hasn’t been terribly accurate, consistently coming in on the high side as disinflation kicked in. The past two years of data shows they lag the trend as shown by this chart from MacroMicro. The Cleveland Fed’s model is consistently low when inflation is rising and consistently high when inflation is falling.
