Market interest shifts from CPI to trends such as housing and rent
CPI day is here once again, though it feels the market excitement is more muted going into this compared to prior months. This is probably due to the fact that the risk markets have already made up their mind on their risk-on views, and that earlier misses in European inflation stats have lowered expectations going in. Street expectations are for a 0.4% core MoM measure, with the usual components in used cars, hospitality & recreation (heading into summer travel), and shelter inflation to act as the major head-line moving variables. The trajectory in rent is the most interesting to us, as to confirm whether the slowdown in shelter prices from March & April are genuine against the conflicting rebound in residential home prices.
