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Monday, July 17, 2006

Inflation Watch

On Wednesday at 8:30 am ET, inflation numbers for June will be released. Economists are all expecting a tame inflation number of 0.2% in June, compared to 0.4%, 0.6% and 0.4% the past three months. In terms of core inflation, they are looking at 0.2% in June, compared to 0.3% the past three months. The main reason for the tamer expectations is flat oil prices in June.. but with oil prices going new highs this month, will this be the calm before the storm? Also to be widely scrunitized is the owner's equivalent rent, which could easily push core inflation to 0.3%. With the lagged effect of interest rates and weakening demand for housing, demand for rental properties could go higher. Expect more volatility in markets this week.

TERENCE

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