Posted 1/26/2024, 4:32:21 PM
Shelter Costs Push Inflation Higher; Rate Hikes May Continue Despite Stock Gains
- Inflation rate is around 2% if shelter costs are excluded from the CPI index, but shelter makes up 35% of the index so can't be ignored
- Government shelter data lags real-time rental data by about 12 months due to calculation methods
- Futures traders have priced in a Fed funds rate of 4.2-4.3% by August/September
- Stock prices have likely not yet fully priced in expected rate cuts, suggesting potential for more gains
- Risks include global events triggering market declines or other components of inflation rising unexpectedly