Headline and Core CPI printed 'as expected' (which is likely disappointing for the whisper numbers and remember the last CPI printed 'cooler than expected'). Goods inflation continues to slow but Services inflation continues to soar (highest in over 40 years). Shelter costs continue to soar.

Expectations for this morning's headline CPI ranges from +6.3% to +6.8% YoY, with consensus seeing a 0.1% decline MoM - something the world and his pet rabbit have bid stocks up into anticipating as the signal for an about-face by The Fed on their higher for longer narrative as it 'proves' inflation has peaked.

The headline print came in right as expected with a 0.1% decline MoM (leaving the YoY print at +6.5% as expected)...

Source: Bloomberg

While Goods inflation tumbled to its lowest since Feb 2021, Services inflation soared to its highest since Sept 1982...

Source: Bloomberg

The energy was the biggest driver of the decline in the YoY print along with Goods costs (while Services continue to rise)...

Services and Food costs rose on an MoM basis...

With shelter still rising on an MoM basis...

Core CPI rose 0.3% MoM as expected, leaving the YoY rise at +5.7% - the lowest since Dec 2021...

Source: Bloomberg

Shelter was biggest contributor to Core CPI 0.3% gain: the increase in the shelter index in December at 0.8% is biggest since 1990s.

• Dec rent inflation 8.35%, Y/Y up from 7.91% in Nov

• Dec shelter inflation 7.51% up from 7.12% in Nov

It is also about 12 months behind market reality.

Real average weekly earnings continue to decline - this is the 21st month in a row that Americans'

Source: Bloomberg

Finally, it appears CPI is tracking the decline in M2 velocity (with a lag) rather well...

Source: Bloomberg

It seems the 'not cooler than expected' CPI print is disappointing the pre-emptive market.

More By This Author: