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“And, you know, it tells a story of inflation expectations moving up.” – Jay Powell

If you’re feeling a little bit like Phil Connors from the movie Groundhog Day this morning, you’re not alone.  For the third straight morning, futures on the Dow are trading higher by a bit over 200 points.  Unlike Groundhog Day, though, the last two days ended in completely different ways.  Whereas Tuesday’s early morning rally was Ned Ryerson-ed and reversed by the end of the day, yesterday, equities were able to build on the early gains before pulling back during Chair Powell’s press conference.  Only time will tell what today’s session will have in store.

It’s a busy day for economic data this morning with the Chicago Fed National Activity Index, Jobless Claims, Leading Indicators, Flash PMIs, and the KC Fed Manufacturing report.

Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.

Readings on inflation, and just as importantly, inflation expectations, have been some of the most closely scrutinized economic data points lately.  One way to track what consumers are thinking about inflation is through their actions online and more specifically, their internet searches.  Below we show Google Trends search history for the term ‘inflation” over the last five years.  Earlier this year, as stimulus funds stoked consumer demand even as supply chains remained in flux, ‘inflation’ searches started to rapidly rise.  They hit a five-year high in mid-February and didn’t stop there.  By early May, searches for the term inflation were at the highest levels since at least 2004.  Unfortunately, there was no Google in the 1970s!  From the peak reading in early May, search interest for inflation started to slow but remained elevated throughout the peak summer months.  More recently, though, search interest has kept declining, and while still high relative to pre-2021 history, there were periods prior to 2021 where search interest for the term was actually higher.  If this more recent trend of declining search interest continues, it would further support the Fed’s forecast for recent inflation pressures to be ‘transitory’ in nature.

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