A brief excerpt:
A few key points:
• The Fed has been raising rates to slow inflation. Since housing is a key transmission mechanism for Fed policy, the housing market has slowed dramatically as the Fed raised rates (and mortgage rates increased).
• The CPI report this morning contained some good news on inflation.
• The BLS reported “The index for shelter contributed over half of the monthly all items increase”.
• The BLS measure for shelter is seriously lagged and is likely behind the curve on the sharp slowdown in rents.
…Both CPI and core CPI were below expectations, and the year-over-year change is declining. Bond yields fell sharply this morning, and the 30-year mortgage rate dropped significantly to 6.67% from 7.25% yesterday (average top tier scenarios with zero points).
…
My current view is inflation will ease quicker than the Fed currently expects.
There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/