US macro/US inflation/retail sales

Inflation

We can all breathe a sigh a of relief again. US inflation behaves (see second row, third column, for core inflation, and, bottom left, for headline) and the disinflationary impulse remains broadly in play.

And so the “goldilocks narrative” returns, the hawkish narrative takes a backseat, and stocks are up with yields lower.

Under the hood; auto insurance and used car prices finally moved lower, and whilst OER (owners’ equivalent rent) remained sticky, we know from newer rents that OER will eventually move lower, and thus we can and should expect a continuation of more favourable inflation prints overtime.

Retail sales

The other good news was the weaker retail sales ex auto and gas print (see second row, third column) which declined.

Monthly negatives are not at all uncommon, but, of late, there’s been more of them than usual, and thus it suggests that the mighty US consumer, responsible for much if not all of the excess demand of late, is flagging, under the pressure of higher rates and cost of living pressures.

This, from a “return to trend” perspective for inflation in a hitherto fore overheated economy is a good thing.

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