US macro

Feb comes in a touch above consensus, for US CPI. Note the second row, third column, printing at 0.4%. Depending on how you choose to look at it, either the medium run trend over the past 18 months remains generally “downward”, or the past 3 months are showing upward momentum.

Data is like that, unfortunately. US yields did move higher, although, once again, looking under the hood, there are reasons to remain optimistic (OER started behaving again, if that term is unfamiliar, please pop it into the search bar on the research portal to find all our previous thoughts there on the difference between new rents, market rents, imputed rents, and so on).

We had good labour market data last week (wages was well behaved, the unemployment rate ticked up, non farm pays rolls was revised lower, the Feb print itself was okay) and so I think, once again, you have to put this CPI print in perspective; to that end, we conclude soft landing still looks good.

But, as we’ve also said before, you only need a few prints running hard the other way to upend the narrative quite quickly.

Markets didn’t seem to care, with both the S&P and NDQ up solidly.

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