Torsten Slok

Well, and the key issue is that, of course, headline inflation is showing signs of higher inflation.

That makes total sense because headline inflation also consists of food and, of course, importantly, energy.

Core inflation expectations, we don't quite know yet what they are doing.

But what we do know is that when you look at various other sentiment indicators, including today we've got consumer confidence also starting to go down.

If you look at the daily indicators for consumer sentiment from Morning Consult, it's also going down for low-income consumers.

middle income, and high income households.

But the key issue at this point is that if you look at the actual spending, the daily data for how many people travel on airplanes is still good.

The weekly data for Redbook same-store retail sales, meaning what was sales in stores last week relative to the same week a year ago, is actually also still

very strong, and what you're also seeing, even hotel demand on a weekly basis from Star, is also very strong.

Both RevPi is strong, the daily rate is strong, the occupancy rate is strong.

So there's a very different divergence between what are consumers saying relative to what are they actually doing.

So at this point, the duration of the shock has simply not been long enough to actually create that demand destruction that we all worry so much about.

Absolutely.

So both on a market basis and a survey basis, long-term inflation expectations are very, very stable and have not shown any signs of going up.

In fact, some of them have actually started to go down.

So exactly, the Fed would mainly worry about our markets getting worried about inflation becoming out of control.

Maybe yes in the next year.

We can call that transitory, temporary, whatever we want to call it.

But it's very clear the market is saying this is absolutely something that's only here for a very limited time.

And then we will go back and have inflation expectations at the longer run, more stable level.