Notes From the Desk – US CPI – Faint Progress
US March inflation points to a slight moderation in price pressures.
- YoY headline CPI 5% vs 5.1% expected.
- YoY core CPI 5.6% vs 5.6% expected.
Consumers are getting some relief on food and energy costs, but service prices remain stubbornly high.
Today’s data also showed further signs of disinflation in the goods sector.
Implications.
- The core CPI number supports a Fed hike in May, but it remains too close to call, as it will also depend on how they view the situation with the regional banks.
- For the most part, the bond market is not overly focused on the May meeting, as investors remain preoccupied with when the rate cuts will begin.
- Treasury yields have moved lower this morning, as traders become more comfortable that the Fed begins an aggressive easing cycle within a few months.
