Morning from Europe.

As per usual, the most important forward looking inflation evidence is released ahead of the CPI report, as the monthly NFIB survey is out.

If we zoom out a bit from the NFIB survey, we get the following

1) Prices are re-accelerating at levels ABOVE target. The survey is consistent with >3% core inflation

2) Wages are at best plateauing and potentially even re-accelerating from levels between 4.5-5%. We are yet to know whether the spike in compensation plans was/is a false flag, but rising wage growth among job changers in the ADP survey points to a re-acceleration as well

3) The actual sales picture is brightening among SMEs from weak levels. The rate of change is positive in sales compared to Q4 last year and it seems like the “recession signal” was off.

Hawkish and reflationary!

Chart 1a: NFIB price plans versus PCE core prices