US prices start to show sustained negativity and that may well transfer to inflation
Transitory is the term used by many a central bank to describe these price falls but at some point transitory can become entrenchment.
At the moment inflation, and in particularly core inflation is holding up yet it won't take much to get the market thinking that price falls will become more deeply ingrained in the US economy. PPI prices continuing to fall alongside manufacturing and production weakness will give those expectations a fair amount of ammo and that means the rates picture will change once more.
The dollar's dipped on this and Reuters have drawn the comparison in their review of the numbers. The problem with prices is that they take a long time to filter through. With oil looking soft once again another big dip will have the inflation watchers squawking and the doves cooing
