US CPI/PPI - 2024-01-10

We're not going to say this hotter-than-consensus CPI print wasn't disappointing. It was also probably wrong, contradicted by the real-time Truflation measure, and our own similar model, which both pointed so slight deflation on the month. More than a third of the headline inflation for December was owner's equivalent rent of primary residences, which includes data as much as two years stale. So far markets have taken out about 10 bp of probability for a rate cut in March. We get two more bites at this apple -- two CPI reports to go before the March FOMC. Nothing in this single month of data changes anything.