Overshadowed by the “dollar” last week was the Bureau of Labor Statistics. The BLS reported the US CPI had increased in July 2018 by the highest rate since December 2011. Running at 2.95% year-over-year, consumer prices accelerated a little from June’s pace.

Not only that, the CPI’s core rate of inflation sped up to 2.35%. That was the highest since 2008! Because of these lengthy comparisons, the dichotomy between media commentary and actual market reaction was quite remarkable. In the former, there is no stopping this accelerating boom while in the latter there is only a sense of growing concern.

This, obviously, is a huge difference from late last year and the beginning of this year. Inflation hysteria was hysterical only by a matter of degree. The mainstream rhetoric was at least in the same direction as market trading, the difference being only one of enthusiasm (much less in the markets).

Now, the bond market, which has shrugged off the past few months of the CPI (and PCE Deflator), doesn’t even pay attention to the number at all. There are, apparently, much bigger things afoot.

For one, the CPI remains wedded to little other than WTI. This late in 2018, even oil prices are more downward. They still contributed mightily to the annual headline inflation number, but only because of last year’s price. The CPI energy index was up by more than 11% for the third month in a row.

And while numerically the core CPI rate is higher than any other posted during the last decade, it isn’t materially so. It peaks only by a few bps above several other junctures that didn’t lead to anything other than false dawns.

In early 2012, the last generally comparable period to the current one, the core rate got up to 2.31%, only a few bps off the current reading. In February 2016, of all months, it was 2.33%. Neither of those represented a material difference for underlying inflation conditions, nor did history prove them to be.