MAY INFLATION KEY POINTS:
- May U.S. inflation rises 1% on a seasonally adjusted basis and 8.6% over the last 12 months, well above expectations
- Core CPI increases 0.6% m-o-m and 6% y-o-y, also above consensus estimates
- Strong inflationary forces could put pressure on the Fed to increase rates in 50 bps increments well beyond the July meeting
Most Read: What USDJPY Tells US About the EURUSD and S&P 500 Break Downs[1]
Updated at 9:00 am ET
MARKET REACTION TO INFLATION DATA
Immediately after the CPI data crossed the wires, the U.S. dollar[2] gained across the board, pushing the DXY index close to the 104.00 level. The move was driven by a jump in Treasury rates, with the 2-year yield soaring to 2.925%, its highest level since November 2018. Meanwhile, the S&P 500[3] futures plunged, dropping towards 3,950 as traders began to position for the possibility of a more forceful tightening cycle by the Federal Reserve over the coming months.
Source: TradingView [4]
Original post at 8:40 am ET
Price pressures remained stubbornly strong last month in the U.S. economy amid soaring energy and food costs, straining household budgets and suggesting that the Federal Reserve has a long way to go to tame inflation and bring it back to the 2% target over the forecast horizon.
According to the U.S. Bureau of Labor Statistics, May headline CPI, which measures a comprehensive basket of goods and services, increased 1% on a seasonally adjusted basis, pushing the annual reading to 8.6% from 8.3% in April, the highest level since 1986, suggesting that inflation did not peak during the first quarter as economists had anticipated and that the battle to combat four-decade high CPI is not yet succeeding. In terms of
