Special topic: The U.S. CPI rose less than expected in April. Expectations for a September interest rate cut were boosted. The U.S. unseasonally adjusted CPI annual rate in April was 3.4%. It was expected to be 3.40%. The previous value was 3.50%. The U.S. seasonally adjusted CPI monthly rate in April was 0.3%. It was expected to be 0.40. %.Previous value 0.40%.
U.S. core consumer prices in April rose 3.6% year-on-year and 0.3% month-on-month. Both were in line with estimates.
U.S. retail sales unexpectedly recorded a monthly rate of 0% in April, lower than market expectations of 0.4%.
Summary of views: Rubeela Farooqi, chief U.S. economist at High Frequency Economics, commented on U.S. CPI data: Overall, price pressure is still high, but it is moving in the right direction.
We believe these data support the Fed\’s case for a patient approach to future policy decisions, although the base case remains for a rate cut this year.
Jason Pride, director of investment strategy and research at wealth management firm Glenmede, said: What these inflation data do for the Fed is that it lays the first foundation for them to cut interest rates later this year.
If the market is worried that the Fed won\’t cut interest rates at all, tonight\’s CPI report only alleviated some of those worries.
It doesn\’t put the Fed on track to start cutting interest rates immediately, as they still need a few more reports to gain some confidence.
Analyst Joseph Richter said that the market\’s subconscious rebound may be more due to a significant slowdown in U.S. retail sales rather than a CPI that is close to expectations.
For several months, sales data has tended to lead commodity CPI.
Analyst Chris Anstey said that Japanese officials in Tokyo must be very happy. The dollar fell in response to the U.S. data. The yen is currently up nearly 1%.
In recent trading, the yen fell to its lowest level since 1990, alarming Japanese authorities.
Charles Schwab analyst Richard Flynn said that although today\’s CPI data may bring comfort to the market because last month\’s CPI data was unwelcome higher than expected, these are unlikely to prompt immediate changes in interest rates.
Patience has been the Fed\’s core message lately.
Officials have been fairly consistent in saying that current interest rates are restrictive enough to keep inflation under control and that a rate cut would be the next step.
However, it is also clear that they are in no rush to take action.
AmeriVet Securities strategist Gregory Faranello said that CPI and retail sales data are beneficial to the Fed.
Both point to the easing in inflation the Fed is seeking.
The numbers would support Federal Reserve Chairman Jerome Powell\’s shift in view from keeping interest rates high for longer to potentially lowering them.
Brian Jacobsen, chief economist at Annex Wealth Management, said inflation was low and retail sales were flat.
The economy is back on track with lower inflation. But consumers are feeling the pinch.
Consumers already paid the price for higher inflation. Now, consumers are paying the price for slower economic activity.
Inflation-adjusted retail sales were not as spectacular as the headline data suggested.
Over the past month. They\’ve been pretty ugly.
Even the booming food and beverage industry is losing some steam.
Immediate market reaction: Traders strengthened their bets that the Federal Reserve will cut interest rates in September and December.
The swap market has raised its expectations for the pace of interest rate cuts by the Federal Reserve during the year; Fed swap prices indicate that the pace of interest rate cuts will accelerate in 2024.
The three major U.S. stock index futures rose rapidly. Nasdaq futures are currently up 0.7%. Dow futures are up 0.5%. S&P 500 futures are up 0.6%.
Spot gold rose by $15 in the short term and was quoted at $2,373.27 per ounce.
The U.S. dollar index DXY plunged nearly 40 points in the short term and is now at 104.42; the U.S. dollar fell 1% against the Japanese yen during the day and is now at 154.84.
The U.S. 2- to 10-year Treasury bond yields fell by more than 10 basis points within the day after the CPI was released.
Bitcoin rose rapidly. The intraday increase reached 3.5%.
U.S. CPI fell as expected in April, as bets on Fed rate cuts increase
The annual rate of U.S. CPI before seasonally adjustment in April was 3.4%, expected to be 3.40%, and the previous value was 3.50%; the monthly rate of U.S. CPI after seasonally adjustment in April was 0.3%, and the expected rate was 0.40%, and the previous value was 0.40%
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