US Bond Market Week in Review: There is an Inherent Weakness in the PCE Price Deflator That the Fed Isn't Considering

            For most of this expansion, the Fed has publicly stated that it is using a 2% inflation target.  In addition, their models have continually had a “just around the corner” feature, where, despite currently weak PCE measures, higher inflation would occur in the near future.

            Unfortunately, a historical look at the broad components of their preferred inflation measure belies the Fed’s optimistic projections: