Parsing the word 'restrictive'/Eurozone and Tokyo CPI stats/A bunch of earnings comments, make sure to read every word

I said last week when reviewing the Fed minutes that a member using the word 'restrictive' was code word for 'I don't want to raise rates again, am looking for good reason to cut and that is my bias.' What was also revealed in the minutes was that Feb members had differing opinions on what the definition of 'restrictive' was in the context used. That was clear yesterday when the typically dovish NY Fed president John Williams in a prepared speech (so words used carefully) said "The behavior of the economy over the past year provides ample evidence that monetary policy is restrictive in a way that helps us achieve our goals." Ample? For some for sure but certainly not for others. 

On the other hand, Dallas Fed president Lorie Logan used her talk yesterday to say "policy is just not as restrictive as we think that it might be." She's likely looking at financial conditions and a stock market that is around record highs and credit spreads that are as flat as a pancake. 

Ahead of our inflation data today, and before the ECB is all set to cut rates in a few weeks, the Eurozone May CPI rose 2.6%, up from 2.4% in April and was one tenth above expectations. The core rate was higher by 2.9%, two tenths above the estimate and up two tenths from the month before. So on headline inflation the ECB has REAL rates at just around 1.5% and they think that is tight. Also understand that US inflation and the Eurozone read are NOT apples to apples comparisons as housing is only about 6% of the ECB figure, and for many there it is not even close to capturing the % of one's income that they spend on housing, assume much higher. 

With the US inflation reads, understand too that while we all focus on rents, for homeowners the insurance they pay for their home, which is skyrocketing for some, is NOT captured in CPI and only by a slight amount in PCE. And, property taxes, which seem to go up about 5% every year, IS NOT measured in either CPI or PCE. 

On rents by the way, the Apartment List National Rent Report of NEW leases for May saw a .5% m/o/m rise, up for a 4th straight month but spring is seasonally stronger. The y/o/y change is still down .8%. At some point this will show up in CPI but KEEP IN MIND, the inflation components of CPI like OER NEVER rose as much as real rents did a few years ago at the peaks, especially new ones.