Gas buddy has turned quickly after the Fed minutes.  This means core cpi 2.0 will be possible in mid-Aug.  Even though Fed will do nothing at end of July, there will be talk of bubbles in the minutes on Aug 21. The Fed has also upset the mortgage market hitting real estate hard – not their intention.

In addition, July inflation will become a problem now limiting upside to risk markets in August. July inflation was very weak last year and this year clearly strong making YoY comparisons push inflation to 2.0.  Transition to risk off could occur the 3rd week of August (based on 10wkma crossing for TLT and TLT:SPY). The first taper would be Sep 19 if core cpi 2.0 is achieved in mid-Aug. Even a weak August inflation would keep YoY core inflation at 2.0. All have seen the effects of taper which will be bad for stocks/risk assets but healing for the mortgage market.