As data dust settling and the bond market apparently has a BID, some thoughts from a rather large German entity hit the inbox just after this mornings CPI … and the focus here is on RENTS (OER) …
Transitioning out of transitory
Back in August, we argued that the fate of the "transitory vs. persistent" debate will be determined by the domestic and more persistent components of inflation such as rents and OER rather than used cars. We highlighted then that leading indicators were consistent with rent inflation bottoming and reaching ~4.5% by the end of Q1 2022.
An update following today's CPI release shows that rent inflation is so far moving in line with this assessment. Moreover, with the benefit of a few more months of data, leading indicators are now consistent with rent inflation above 5% by the end of Q2. US inflation is transitioning out of the transitory phase.
The data is all out there for one / all to economically workbench and SHOW whatever it is one deems MOST important … so FAR it would seem that this ‘modeled’ leading indicator is as good (bad) as any other you might have seen … Interesting food for thought as this focus seems to neglect ‘Earl completely … and many OTHER interesting, important categories impacting the data (cars, for example).