The key data this week is tomorrow's inflation in the US. As a reminder, in January we had a very strong increase in employment, wage inflation and consumer inflation (CPI). After the February employment report, it turned out that January was an aberration both in terms of employment growth and wage inflation. I am attaching my two favorite charts from the labor market... (Figure 1 and 2).
Will it be the same with inflation? Will the reading for February also indicate January as a departure from the trend? The key in tomorrow's report will be:
(1) monthly change in core CPI: +0.3% M/M neutral, +0.4% hawkish and confirmation of the inflation pressure from January, +0.2% M/M dovish (i.e. January was an aberration) - see Figure 3,
(2) OER (owner's equivalent rent of residences) inflation, was the jump in January to 0.6% M/M an aberration? Especially since it was inconsistent with Rent Inflation (rent of primary residence), which increased only 0.4% in January - Figure 4 (as a reminder, Rent of Primary Residence is the rental charge which consumers pay to rent their primary residence; OER is the rental equivalent owners expect to be paid if they were renting out their own home in the market),
(3) You can also look at Core Goods M/M inflation tomorrow to see if it will accelerate... and some opinions from Wall Street express such concern... - Figure 5.
Comments