Something for your Espresso: USD-flation diverging from global-flation
Morning from Europe!
I am admittedly a happy man after my beloved FC Copenhagen beat Galatasaray to advance from the group stage in the Champions League for the first time in many years!
US inflation exceeded expectations, albeit marginally, which is the first major inflation print to do through the month of November.
Judging from financial conditions, the risk of a cyclical upswing in US prices is larger than for European peers and with a relatively stubborn 6 quarter lag between FCIs and prices, we are certainly not ruling out a new cyclical price pressure in the US emerging in 2024.
European core inflation is now BELOW US core inflation for the first time since January.
Chart 1: Conditions are much easier in the US than in Europe
The USD inflation is so far the only major inflation print in November to print slightly on the upside of expectations. This underpins our data-backed view of USD-flation diverging from global-flation.