Mill Street Research @millstreetresearch.com · 26d Market believes that inflation pressures outside of energy and tech hardware are declining, so now that oil has come down (mostly), the next-12-month expected CPI inflation rate (from CPI swaps) has plunged to near 2%.
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One reason is that shelter (rent) is a big component (35%) of the CPI, and its growth rate has been falling. The rent component is always heavily lagged vs current market prices, and market rent growth has been quite low lately based on Zillow's home rent index -- now lower than pre-COVID.