Deutsche BankResearchFebruary 2024US Inflation Outlook: Heartbreak hotel for rate cut hopes?Justin Weidner, Matthew Luzzetti, Brett Ryan, Amy YangSuvir Ranjan1 Columbus CircleNew York, New York 10019Tel: 212 469 1679#PositiveImpactIMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSUREINFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Distributed on: 17/02/2024 00:44:09 GMT7T2se3r0Ot6kwoPa1Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchTable of contentsPage NumberTop charts02Latest developments08Distributional look at inflation33Inflation expectations43Leading indicators56Import and export price inflation66Forecast and Models702Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchTop charts3Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchDetails within the CPI and PPI point to strong January core PCE printWill have a dot with our estimate of core PCE printSource: BEA, BLS, Haver Analytics, Deutsche Bank-0.50-0.250.000.250.500.751.00-0.50-0.250.000.250.500.751.002018201920202021202220232024Core PCECore CPICore CPI vs. Core PCE% chg,m/m% chg,m/mDB estimate for January core PCE print4Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchStrong portfolio management likely to add about 8bps to the Jan core PCE printSource: ICE/Bank of America Merrill Lynch, S&P, BLS, Haver Analytics, Deutsche Bank-12-8-404812-12-8-4048122018201920202021202220232024Return on 60/40 portfolio (1m lead)PPI: portfolio managementPortfolio management inflation and portfolio returns% chg,m/m% chg,m/mNote: The 60/40 portfolio is constructed with 60% S&P500 and 40% ICE BofA Merrill Lynch Corp Master Bond Index.5Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchSome progress on primary rents, but owners’ equivalent rent spikedSource: BLS, Haver Analytics, Deutsche Bank0.0250.2250.4250.6250.8250.0250.2250.4250.6250.8252018201920202021202220232024Rent of primary residenceOwners' equivalent rentCPI rents% m/m% m/m6Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchDifference between primary rents and OER print the largest in almost 30 yearsSource: BLS, Haver Analytics, Deutsche Bank-0.3-0.2-0.100.10.20.3-0.3-0.2-0.100.10.20.3OER m/m print less primary rent m/mCPI rentsPpt.Ppt.7Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchRecent core PCE data had been at target, but the January data likely to unwind some of that progressSource: BEA, Haver Analytics, Deutsche Bank-2-101234567-2-1012345672018201920202021202220232024% 3m, AR% 6m, AR% y/y% ChgCore PCE% Chg8Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchLatest developments9Weidner, Luzzetti, Ryan, Yang | February 2024Deutsche BankResearchRecent headline CPI prints have been more normalSource: BLS, Haver Analytics, Deutsche Bank-8-404812-8-4048122018201920202021202220232024% 3m, AR% 6m AR%...
