QUICK QUILL — Downside momentum has taken control of the narrative. Between now and next Friday’s FOMC blackout, it’s fair to say that Powell’s challenge to spin said narrative is the most difficult in the Republic, which is saying something indeed.
TAKEAWAYS
- In June’s CPI report, Owners’ Equivalent Rent and Rent of Primary Residence both posted their smallest increases since mid-2021; on a combined basis, they’ve fallen from a 5.2% SAAR in May to 3.3%, back in line with their 2017-19 average
- Durable goods deflation continues to hit new lows, printing at a record -4.1% YoY in June in data to 1936; meanwhile, Chained CPI, which updates expenditure weights and more closely proxies the Fed’s preferred PCE deflator, has inverted in the short-run, down -0.8% on a 3MA basis
- Initial jobless claims had a notable downturn this week but the 4-week moving average of continuing claims is now at a six-year high; try as he may to maintain Higher for Longer, Powell may have no choice but to begin cutting in light of the latest inflation data