TD: Rent Prices Could Accelerate Further

While TD doesn't think the "strong" Jan CPI report will tip the Fed into hiking 50bp in March, it "makes it more likely that the Fed accelerates the number and pace of 25bp rate hikes in 2022 and accelerates both the timing and pace of balance sheet runoff."

• They note strength in rents/OER, many travel-related items, medical care services, apparel and furnishings, but conversely, some services (eg hotels) impacted by Omicron, and vehicles prices losing steam.
• TD doesn't expect "any significant slowing" in rents, and "if anything the pace could accelerate a little more"; they continue to expect used vehicle prices to "eventually be reversed", with modest strength again likely in February, but prices cresting overall.
• While 12-month readings will be down by the end of 2022, TD warns "the pace for core in particular is likely to rise further in the next few reports."