**As seen in Risk In The Week report 06/09/24, subscribe at cablefxm.co.uk/reports
U.S. headline consumer prices eased to 3.4% Y/y from the prior 3.5% in April, this was in line with the consensus survey. CPI at 0.3% M/m missed economists' expectations of 0.4%, and core prices matched this pace. Judging by the headline and core metrics, the report was perceived as benign, however, some components continue to move away from the target. Medical services prices jumped 2.7% Y/y to the highest pace since January, car insurance increased 22.6% Y/y, shelter costs rose 5.5% Y/y, and a measure of supercore inflation rose to the highest level in a year at 4.91% Y/y. The May CPI report will be followed by the FOMC June rate decision, we're set to receive a fresh batch of macroeconomic expectations.
Analysts at Wells Fargo said they do not expect the May data to have a strong impact on the FOMC meeting, they pencil headline and core CPI rising at a monthly pace of 0.1% and 0.3%, respectively. CIBC noted rental inflation slowing over the last couple of months and expects the softness to be more evident in May. CIBC warned that the market remains sensitive to inflation surprises. Strategists at J.P. Morgan have previously flagged market participants being more sensitive to CPI downside, a regression of dollar trading vs data surprises over the last year is showing limited upside on a beat. The May headline inflation forecast range goes from 3.2% to 3.5%, the top ranked forecaster pencils the metric at 3.4%.
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