Tim Mahedy’s Post

US inflation data in November is broadly in line with expectations, with headline inflation slowing and core inflation steady at 4% on a year-on-year basis. CPI MoM was a little higher than expected. Services inflation remains sticky and the supercore CPI actually picked up in November. That's the hawkish bit. The large disinflationary impact has already happened with the drop in energy prices and goods prices. The last mile to 2% will be more gradual and bumpy, but it will carry on as the labour market softens. Rent inflation will be a big part of the story, the good news is that leading indicators from more timely rents surveys suggest things are cooling into 2024. Market expectation of around five rate cuts in the US has barely changed after the report. It seems markets have already made up their minds. The next event risk will be the Federal Reserve’s decision tomorrow where the latest economic and interest rate projections will be released, which may challenge markets’ current dovish consensus. We do think markets' expectations on rate cuts have gone too far. It is hard to see the Fed projecting a dovish tone as core inflation remains at 4%. It's likely the dot plot shows fewer rate cuts than currently priced in and Fed chair to push back against market expectations. Data dependency will be key. #USCPI #USinflation #markets #FederalReserve #inflation RBC Brewin Dolphin

 US Inflation and way forward for the Fed The month of March saw consumer prices in the US exceeding market expectations. Rising inflation could potentially delay any rate cuts by the US Fed.   In his recent blog, Nikhil Mohan, Economist, Franklin Global Fixed Income shared his insights about the recent inflation readings in the US and how could it impact the Fed’s decision to start reducing policy rates this year. A few highlights of his blog are as below: 🌍 On a monthly basis, the US headline and core inflation exceeded market expectations—both rising 0.4%.   🌍 The core measure has now risen at this pace (0.4%) for three successive months.   🌍 On a six-month annualized basis, core CPI (CPI excluding food and fuel) is now near 4%, while supercore CPI (core services excluding housing) inched above 6% (the highest since Oct 2022).   🌍 Our base case has increasingly turned towards a September rate cut and 50 basis points (bps) of cuts in total this year.   🌍 If inflation were to continue reaccelerating and/or stall at its current pace, we wouldn’t rule out a further delay in rate cuts (beyond September). For the detailed blog, please click 👇

Public metrics like CPI, PPI, and NFP job data influence currency and index values long before they are released. Our role as traders and investors is to interpret this data, considering that consensus opinions may not always align with reality. Recent CPI Trends: The Federal Reserve has aggressively increased interest rates to combat inflation, aiming for a 2% target. Despite these efforts, inflation metrics like the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) remain above 2%. The latest report shows headline inflation at 3.7%, with core inflation at 4.3%, signaling a lag effect in shelter costs. Rapid Rate Hikes: The Fed's swift rate hikes, from 0.23% to 5.5%, aim to suppress core inflation, currently around 4%. Debate persists within the Federal Reserve on the effectiveness of these hikes with some members advocating for a pause. The timing of a Fed pivot to cut interest rates remains uncertain, but a rate cut in 2023 seems unlikely due to inflation concerns. Challenges and Consequences: The Fed's 2% inflation target may necessitate economic sacrifices, potentially leading to increased unemployment and financial strain on consumers. Slowing income growth and rising expenses are concerning signs for the U.S. economy. The Fed's battle against inflation through interest rate hikes presents a challenging dilemma, with potential economic hardships. Navigating these uncertainties requires smart investments and financial literacy. #FederalReserve #Inflation #InterestRates #EconomicPolicy #CPI #EconomicIndicators

Weekly Economic Update!   On Tuesday, we received the most recent inflation report. The Headline CPI number showed that the Fed might finally be winning its battle on inflation. 📉 However, if we dig deeper into the Core PCE number, we can see that things may not be as rosy as the Headline CPI number might suggest.   On Wednesday, the Fed decided to pause it’s 15-month long rate-hiking cycle. This pause was widely welcomed by many people. However, the Fed’s forward guidance was much more aggressive, or hawkish, than expected. This was unwelcomed and unexpected. The Fed even went so far as to say that they see the possibility of 2 more rate hikes in 2023. 😱   So, after all this info and data…are we still headed for a recession?   This economy is very confusing. There appears to be a Yin for every Yang. ☯️ So, let’s spend a few minutes digging into the numbers and seeing what we can find!   Article: https://lnkd.in/gUvu3cRT Video: youtube.com/@herobanker   Thank you for taking time out of your day so that we can help you become your own financial hero. We hope to see you again soon!   Also, be sure to FOLLOW Hero Banker on social media for updates on banking, finance, the economy, and more! . . . . . #finance #financetips #inflation #recession #fed #thefed #federalreserve #ratehikes

1. US inflation edged down to 3.1% in November, in line with expectations. This is down from 3.2% in October. 2. The core measure of inflation, which excludes food and energy prices, remained flat at 4%. 3. This data comes just a day before the Federal Reserve is set to vote on interest rates. While the Fed watches the Personal Consumption Expenditures (PCE) data more closely, this CPI reading could influence how willing Chair Jay Powell is to push back on markets' expectations of rate cuts as soon as March. 4. The data had a relatively minor impact on the markets. The yield on the two-year Treasury note, which is sensitive to short-term interest expectations, was down slightly, while the ten-year yield was also down slightly. #Economics #Plainfield #NJ

PCE vs CPI: By one measure inflation is closing in on the Federal Reserve’s 2% target. By another it is still far away. Whether, and how, that gap closes could be critical to Fed plans this year. The article discusses the discrepancy between two key inflation metrics, the Consumer Price Index (CPI) and the Personal Consumption Expenditures price index (PCE). While CPI shows higher inflation rates, PCE is preferred by the Federal Reserve. Differences in weightings of items like housing and healthcare contribute to this gap. The Fed's focus on PCE could impact future rate decisions. Economist Omair Sharif predicts a wide gap between CPI and PCE inflation for most of the year, with both measures eventually cooling down. #InflationMetrics #FederalReserve #ConsumerPriceIndex #PersonalConsumptionExpenditures #EconomicIndicators #FedPolicyDecisions #CorePCEIndex #InflationAnalysis #MarketImpact Source: Wall Street Journal, ChatGPT https://lnkd.in/ez-BB5_e

"US Inflation Tops Forecasts!" 👉 According to the Bureau of Labor Statistics (BLS), the core CPI (Consumer Price Index) - excludes food and energy - increased 0.4% in January from December, the most such increase in 8 months. On a year-over-year basis, the core measure advanced 3.9% the same as prior month (see chart below from Bloomberg). ✍ Given the US Fed's backward-looking bias, the report reduces the already-slim chances the Fed officials will start lowering interest rates soon. The equity markets sold off and Treasury yields jumped after the release of the report this morning. The report highlights increases in the price of food, car insurance and medical care. Shelter costs contributed to over 65% of the overall increase. 🤔 Last week the BLS's revisions confirmed that inflation came down as fast as initially reported at the end of 2023. The new weightings, however, will place greater emphasis on services and less on goods, which economists believe will boost the outlook for the CPI this year. 💡 Stepping away from the daily noise of economic reports, there are macro trends that indicate we may be in a higher inflationary regime going forward. The post GFC (Great Financial Crisis) period was marked by lower inflation. Going forward, #deglobalization (onshoring of manufacturing) and #decarbonization (shift toward renewable energy) will prove to be inflationary. Higher interest rates are ineffective against these macro trends. “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic.” - Peter Ferdinand Drucker #inflation #monetarypolicy #renewableenergy

U.S. inflation cooled for the first time this year. That comes after a hot Q1 sowed some seeds of disinflation doubt. The details: The April Consumer Prince Index (CPI) showed U.S. headline prices rose 3.4% over the last year, decelerating from 3.5% in March. Similarly, the core measure, stripping out volatile food and energy components, ticked lower to 3.6% from 3.8%. Especially notable: More than 55% of the items in the CPI basket are now running at a rate below the Fed’s 2% target. A year ago, more than half were clipping at an above 4% pace. Our read: In all, while the journey back to target isn’t over just yet, we are on the way there. That could set policymakers up to deliver their first rate cut toward the end of this year. #jpmorganprivatebank #inflation #CPI #Wealthmanagement #Wealthadvisory

Inflation Still Bumpy, But Trends Support CRE Outlook Headline inflation ticked up to 3.4 percent over the year ended December 2023, as both energy and shelter costs accelerated during the month. While this higher reading appears to complicate the Federal Reserve's stance on monetary policy in 2024, market probabilities for a rate cut in March actually grew over 500 basis points, to about 70 percent shortly after the CPI data release. The continued cooling of core inflation, which ticked down to 3.9 percent in the 12 months ended December, is signaling that most consumer prices — aside from food and energy — remain on a steady downward path from their highs noted in June 2022. Marcus & Millichap’s Full Report: https://lnkd.in/gdQ7TZsn Key Highlights Include: - Strong demand for housing keeps shelter costs elevated - Gasoline prices point to recalibrating demand for industrial space - Growth in retail sales outweighing inflation - Deal flow poised to rise #NNN #retail #realestate #investment #investing #commercialrealestate #property #passiveincome #cre #investor #realestateinvesting #commercialproperty #netlease #retailrealestate #inflation

"Economic Twist: U.S. CPI Maintains Steady Course, Core Inflation Shows Signs of Moderation"   In a surprising turn, the U.S. Bureau of Labor Statistics reports that consumer prices in the United States remained unchanged in October, in stark contrast to the expected 0.1% increase. This unexpected stability follows a 0.4% rise in September. Delving deeper, the Core Consumer Price Index (CPI), excluding volatile food and energy components, posted a 4.0% increase on a year-on year basis in October, slightly down from September's 4.1%. These figures present a departure from economists' projections, who had anticipated a milder CPI rise of 0.1% and a 3.3% year-on-year increase.   Over the past 12 months, the overall CPI rose by 3.2%, a marginal decline from the 3.7% observed in September. Despite this, inflation continues to surpass the Federal Reserve's 2% target. Interestingly, market sentiment and economic indicators are leaning towards a potential conclusion to the Federal Reserve's tightening campaign. Notably, traders have adjusted their expectations, with the probability of further rate hikes dropping from an earlier 28% to now below 10%, based on futures contracts tied to the Fed's target rate.   These developments come as Federal Reserve Chair Jerome Powell indicates that while the current policy stance remains, adjustments could be made if deemed necessary. This shift in market expectations underscores the delicate balance policymakers face in navigating economic dynamics.   In light of the latest CPI figures and the evolving economic landscape, how do you perceive the trajectory of inflation in the coming months, and what implications might it have on monetary policy decisions? Your insights are invaluable as we navigate these dynamic economic conditions! #usa #cpi #data #interestrates #monetarypolicy #inflation #growth #banks