Benjamin Verschuere’s Post

The latest CPI data was released this morning. The report shows shelter costs rose 0.4% in April, indicating stabilization in new lease prices. While rents aren't decreasing (which would signal deflation), they're not inflating significantly either. This steady trend is a positive step toward controlling overall inflation. If you believe inflation will hit the 2% target or that the Fed should cut rates soon, this data supports your view. It’s not a dramatic shift, but it’s progress and offers a reason for optimism

February inflation data are in: CPI 3.2% vs. 3.1% expected Core CPI 3.8% vs. 3.7% expected I still yet to see any data pointing towards rate cut even in May as many predict, the euphoria in risk assets doesn’t mean anything to the Feds nor they consider it per Hon. J Powell. At best it’ll be higher for longer but I don’t see any cuts until we are consistently under the Fed’s target of 2% which will take time given the service sector is the main driver of high inflation.

Antipodean Macro on the ugly ugly Aussie inflation data: The more important CPI ex travel and ‘volatiles’ measure also rose +4.0% y/y (+4.1% y/y on a seasonally adjusted basis), which was in line with our forecast (of +4.1% y/y). On the same basis, the +1.2% rise in 3m/3m terms was in line with our forecast and points to a significant risk that the RBA’s +0.8% q/q Q2 trimmed mean inflation forecast is much too low.

Inflation was hotter than expected in January, with rising shelter costs (rent & utility) a key contributor to the increase. Yet, annual inflation has come down quite a bit after peaking in 2022. Headline CPI is now at 3.1% (down from 9.1%). Core CPI, which removes food and energy prices, is at 3.9% (down from 6.6%). Up next, PPI data on Friday. How will the Fed see this progress as it ponders monetary policy and rate cuts this year? 

Huge inflation news today! All measures of CPI cam in below forecasts. Month of month came in at -0.01% versus forecasted +0.01%. Treasuries falling. Odds of September rate cut will increase, and it was 77% last week. Great news for CRE! #economy #interestrates #inflation #multifamily

This morning’s CPI (inflation) number printed a stronger-than-anticipated rise in core inflation in August. Although core inflation came in at 2.5% & 3.2% respectively matching expectations, it was core prices that rose 0.3% in August, more than the 0.2% expected. Services inflation is still running very hot as shelter inflation is rising again. This data could move the Fed to move with a 25bps cut in September versus 50bps as many expect. #inflation #cpi #core #macro #economy #services #fed #interestrates

CPI this morning came a little hotter than expected. It’s now been 8 months (June 2023) since inflation stopped going down. It’s remaining sticky here near the 3% area still above the Fed’s 2% inflation target. Markets want and are forecasting interest rate cuts this year, but I don’t think we are seeing justification for that in the inflation data. It will be interesting to see how this plays out for the balance of 2024.

CPI Remains High at 3.5%+ Puts Rate Cuts in Question Today’s CPI was higher than expected at 3.5% YOY. Take away energy and food and core inflation was even higher at 3.8%. Persistent inflation is calling into question the timing and amounts of future Fed cuts that will be “data driven,” according to Powell. Markets have been quick to react with a swift retreat in equities and the 10 Year approaching 4.5%. Not the path the consensus forecasted in December. Prepare for “higher longer.”

Annual inflation has come down quite a bit after peaking in 2022. Headline CPI is now at 3.1% (down from 9.1%). Quite a positive trend. Looking forward to Fed monetary policy moving forward.

January US CPI: will be focusing on the broadening out of dis-inflation. Where to look? Services which is up 5% Y/Y & services ex-energy which is up 5.3% (shown below). The evolution of this data may provide insight on when rate cuts happen (May vs. June or later) as well as number of rate cuts this year. Let’s see how broad the disinflation spreads out into services & housing in the index.