OER is the core of the bullish equity market trade. It is the primary measure of housing inflation in the US CPI. This measure shocked most in last week’s strong CPI because OER normally tracks much weaker and more timely private indexes. Goldman has more.
We expected and indeed received a large “January effect” in last week’s price data, with CPI and PPI both surprising consensus to the upside.
In our view, the bigger surprise was the 0.56% spike in owners’ equivalent rents (OER), which outperformed the primary rent measure by the most since 1995.
