US CPI May Data Release

This week’s market data events have kicked off with the US Inflation report, which has been trickling lower since the US Federal Reserve Bank started hiking interest rates.

This time was no different as US Headline CPI came in lower than expectations at 4% from the 4.1% expectations annually and a lower print on the month-over-month figure coming in at 0.1%. Core inflation which excludes food and energy prices, remained muted at 5.3% Year-over-Year for May, which is still lower than the 6% we saw in May 2022.

The US Bureau of Labor Statistics report showed a rise of 0.1% in May in the All-Urban Consumers (CPI-U) Index on a seasonally adjusted basis, with shelter being the most significant contributor to the monthly all-items increase.

The major US Indexes rose after the inflation announcement as market participants could expect the US Federal Reserve stance for this sitting to remain unchanged from the positive CPI data. The current US interest rate expectations are overwhelming that the FOMC will pause interest rates on Wednesday. According to the CME FedWatch Tool, the probability of an interest rate pause has increased to 97.6%, which could possibly see the current bull trend escalate if it comes to pass.

Sources: US Bureau of Labor Statistics, Bloomberg, CME FedWatch Tool.

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