US DATA: South Region Behind Latest Moderation In Rent Inflation

Surprisingly soft CPI housing inflation in February appears to have been driven by the South, the US region that has generally weighed on rental inflation over the past year relative to other regions following much stronger rental inflation over the past year. This is an area that saw particularly strong rental inflation after the pandemic amid sizeable inward migration before housing supply increased to meet this demand and resident inflows slowed. * Within the NSA details, southern OER slipped -0.03% M/M in February, which whilst only just negative was still technically its first decline since 2010), after 0.19% M/M in Jan, or for a better NSA comparison 0.15% in Feb 2025 and 0.47% in Feb 2024. * Similarly, southern primary rents edged -0.04% M/M lower after 0.09% in Jan, 0.09% in Feb 2025 and 0.46% in Feb 2024. * Governor Miran (voter, dove) when a Board nominee back in Aug 2025: "Our calculations are that the massive in surge of renters into an only sluggishly adjusting housing supply probably boosted rents by about 4-5%. And that's a significant contribution to overall inflation at a time when the housing stock adjusts only slowly... we think that there's a very strong reason for thinking of very profound service disinflation coming up in the near future, as net migration has come to zero because the President's strong border policies."

MNI: US FEB TREASURY BUDGET -$307.5B

* MNI: US FEB TREASURY BUDGET -$307.5B

US DATA: Housing Inflation Continues Steady Moderation With Further To Go

Housing CPI inflation was on balance softer than expected in February, with the heavily weighted OER within range but at the lower end of expectations along with a more notable miss for tenants' rents. It continues a recent run of at or below pre-pandemic run rates with private indicators pointing to further moderation in the pipeline. * OER: 0.22% M/M (analyst av 0.24, range 0.18-0.27) after 0.22% - this is 26% of the CPI basket * Tenants' rents: 0.13% MM (analyst av 0.24, range 0.22-0.26) after 0.25% - this is 8% of the CPI basket * The weighted average of 0.20% M/M follows 0.23% in Jan, 0.30% in Dec, the usual Oct-Nov period where it was broadly assumed to have been 0.00 in Oct before 0.29% in Nov (carry forward when missing data) and a surprisingly weak 0.12% M/M in September. * In other words, it's seeing an increasing number of months recently at a pace below that seen pre-pandemic such as the 0.28% M/M averaged through 2019. * BLS housing inflation has clearly been moderating then, with OER at 3.2% Y/Y and primary rents at 2.7% Y/Y, but private indicators point to further moderation ahead with Zillow at 1.9% Y/Y as of Jan and Apartment List at -1.5% Y/Y as of Feb. * The BLS's new tenants rent index continues to better reflect these new lease metrics, at 1.2% Y/Y in Q3 after -1.9% in Q2 and 1.5% in Q1 although is prone to large revisions (something that should be reduced somewhat going ahead with the introduction of a longer period from the end of the quarter to publication).

US DATA: Sizeable Upward Revisions To Still Early Days For Core PCE Estimates

* Analysts see stronger core PCE inflation estimates for February after today's CPI print, with an average unrounded estimate of 0.39% M/M (range 0.31-0.45) vs closer to a tentative 0.25% pre-CPI. * There is regular mention of upward revisions being down to small core goods components with larger weights in core PCE than core CPI. * One particular example here is computer software & accessories increasing a non-seasonally adjusted 6.5% M/M vs 3.3% in Feb 2025, 3.6% in Feb 2024 and 0.9% in Feb 2023 (1.2% weight in core PCE vs 0.03% in core CPI) * This is of course ahead of Friday's January core PCE release which could see some revisions to this February tracking (we have seen unrounded estimated average 0.42% for Jan) plus of course the Feb PPI report on Mar 18. * TD Securities: 0.31% M/M * GS: 0.34% M/M (vs 0.24 pre-CPI) for 2.97% Y/Y * Nomura: 0.38% M/M (vs 0.25 pre-CPI) * Wells Fargo: A "low" 0.4% M/M * Citi: 0.42% M/M (vs 0.26 pre-CPI) * Morgan Stanley: 0.42% M/M (vs 0.27 pre-CPI) * Barclays: 0.45% M/M (vs 0.24 pre-CPI)