A new positive surprise, BUT also with firm evidence that the peak is in
A short thread on US inflation
1/n
A short thread on US inflation
1/n
I know you will all hate me now, but this was a mixed bag of goodies..
The main culprit in this inflation report is the shelter cost .. now running at >0.7% MoM .. This is a big category in the CPI basket
2/n
The main culprit in this inflation report is the shelter cost .. now running at >0.7% MoM .. This is a big category in the CPI basket
2/n
But.......... This is also the most lagging variable at ALL - the shelter index in the CPI basket lags the housing price development by up to 18 months. So if house prices drop today, it will take more than a year for the CPI methodology to realize this
3/n
3/n
Todays shelter cost hence hold little to no value-add in terms of describing the live inflation pressure, which is better predicted by freely traded assets such as commodities
Commodity costs are DOWN and they have continued down since the data in this inflation report
4/n
Commodity costs are DOWN and they have continued down since the data in this inflation report
4/n
All in all, this report is actually a pretty decent confirmation that the peak is in - headline will be headed below 6% by year-end, but the dark horse is how to get inflation back to 2% - that will be a TOUGH journey for the Fed
5/n
5/n
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