Inflation talk ahead of CPI/Japan leading again global yield jump/Other good stuff

While on Wednesday we'll most likely see further deceleration of rent growth show up in the BLS CPI figure, and all that supply for renters is coming at the right time to ease the pricing pain, the affordability situation for home buyers remains the most stretched since data was kept going back to 1989 according to the National Association of Realtors. With a breakeven line of 100 where the median income can afford the median home price, their Affordability Index for July remained unchanged at just 87.8, a record low going back 34 yrs at least. Unless this changes anytime soon, a lot of that multi family supply will be absorbed rather well. https://cdn.nar.realtor//sites/default/files/documents/hai-07-2023-housing-affordability-index-2023-09-08.pdf?_gl=1*baujpd*_gcl_au*NDA2NjgyNDAzLjE2ODk4NjIzMzk.

Another swing factor on inflation but on the goods side we know are used car prices. Manheim on Friday said wholesale prices in August rose .2% m/o/m but are still down by 7.7% y/o/y. Cox Automotive which releases the data said "August brought a stop to wholesale price declines, though it was only a small reversal of the larger magnitude declines so far this spring and early summer...sales are slightly stronger than expected, inventory remains tight, and prices are holding at levels around 6% below last year at the same time. These factors are expected to prevent any substantial decline in wholesale prices through year end." I'll add again, the past three years of depressed new car sales means the coming three years will see historically lower used car inventories. 

On the transportation side in terms of pricing, I saw Friday that UPS is planning to raise its 2024 tariff rate by 5.9% on all modes, air, ground and international services. FedEx announced the same rate increase in August. That compares with a 6.9% increase for both in 2023.  

With respect to health insurance's influence on CPI, beginning last October we started a string of very sharp price declines as calculated in the BLS data. The declines didn't happen in real life but was more a calculation quirk as we came out of covid. Thus, we cycle past that in the next few months and the health insurance calculation will start inflecting higher again. In real life, in case you didn't see the WSJ article over the weekend, it was titled "Health insurance costs are taking biggest jump in years...Employers and workers are expected to see an increase of about 6.5% or higher in health plan costs next year." https://www.wsj.com/health/healthcare/health-insurance-cost-increase-5b35ead7 I'll say again here, this is a major factor why services inflation is NEVER transitory but we know healthcare prices are out of the influence of monetary policy, mostly speaking (obviously influences the labor market where most people receive their health insurance).