inflation expectations and why they matter...

The Fed has tried to toe a simple party line the past several months: Not only is current inflation "well-contained," but expectations for future inflation are tame. So rates can stay low. But is that really true? Not according to the data. Core inflation is running at a 3.2% annualized pace now. A different measure of inflation in the personal income and spending report from last week rose at its fastest pace in a year.

And now, we just learned that inflation EXPECTATIONS are rising. Specifically, the Conference Board asks consumers every month what they expect the rate of inflation to be a year down the road. The answer in May? A whopping 5.6%. That’s up from 5.3% in April and 4.8% a year ago. So there goes another leg in the Fed's "we don't need any more rate hikes" stool.