Jim Bianco on November CPI, Global Rate Hikes, and US Treasury Market Impact

November CPI Report Analysis

• 📉 The November CPI print is described as a "statistical mess" due to government shutdown impacting data collection for October.
• ⚠️ Apparel and airline ticket prices appeared artificially low because the data captured Black Friday sales, not pre-holiday pricing.
• 📊 The market reaction was muted, with the 10-year yield showing little change, suggesting underlying concerns about inflation persist.

Global Interest Rate Environment

• 🇯🇵 The Bank of Japan is expected to raise rates to the highest level in 30 years, with their 10-year note nearing 2%.
• 📈 Japan is experiencing its highest inflation since the 1970s, prompting this policy shift.
• 🌍 Most developed central banks, except the US and UK, are expected to hold or raise rates in 2026 due to elevated inflation.

Impact on US Treasuries

• 🏦 Japanese investors, historically large buyers of US Treasuries, are now considering their home market due to rising domestic rates.
• 🇺🇸 While US 10-year yields are still higher than Japan's, the spread is narrowing.
• 📉 This narrowing spread and the BOJ's continued rate hikes will likely lead to a gradual decrease in Japanese investment in US debt.