Sticky prices are still moving upward
Prices for fuel, used cars and rental cars, and airfares all saw immense volatility in the pandemic’s wake. Now, the surge in prices is more than 12 months ago.
Two widely followed measures come from the Cleveland Fed, which publishes a trimmed mean (excluding the biggest outliers in either direction and taking the average) and the median.
These measures were never moved by rental cars or gasoline in the first place. And unfortunately, both continued to rise, and both are at their highest since the series started in 1984
Then there is the critical issue of housing costs
The problem is that the Fed would like financial conditions to stay tight.
Put lower bond yields together with a weakening currency and rallying equities, and you get a substantial easing in overall conditions, which is exactly what the central bank doesn’t want if it’s to reduce demand and keep a lid on inflation.
Wall Street continues to defy inflation skeptics
Working this out is more a matter for gauging crowd behavior and collective action, rather than attempting to prove anything with valuations. A too-expensive market can always get a little more expensive.
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