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CPI Release, FOMC Begins June Meeting Today

CPI

-May MoM CPI: +0.1%; Prev. +0.4%

-May YoY CPI: +4.0%; Prev. +4.9%

-May MoM Core CPI: +0.4%; Prev. +0.4%

-May YoY Core CPI: +5.3%; Prev. +5.5%

FOMC, CPI data has market consensus set on a pause.

The two-day FOMC meeting kicks off today, and the announcement of whether the Fed is expected to pause after 10 consecutive interest rate hikes will come on Wednesday. Powell will most likely stress the importance of the data as it becomes available. A main component of that decision has the market consensus virtually certain that FOMC will “pause” given today’s CPI coming in below expectations.

Core consumer prices, which exclude volatile goods like food and energy, matched market expectations by climbing 0.4% month on month. Various indexes, including shelter, used automobiles and trucks, motor vehicle insurance, clothes, and personal care, experienced increases during the month. Conversely, the indexes for domestic furnishings and operations, as well as airline fares, declined. In terms of year-on-year changes, core consumer prices rose 5.3% in May, following a 5.5% increase in the previous month, aligning with market expectations.

Consumer Price Index for All Urban Consumers (CPI-U) reached an index level of 304.127 (1982-84=100), indicating a 4.0% increase over the last 12 months. Prior to seasonal adjustment, the index recorded a 0.3% increase for the month.

The week ahead

On Wednesday, market expectations anticipate that the Producer Price Index headline and core will show signs of further easing, offering insights into inflation from the producer side. Thursday, investors should closely monitor various important numbers, including weekly Jobless Claims, the Philadelphia Fed Manufacturing Index, Retail Sales, Industrial Production, and some trade data. Friday will feature Consumer Sentiment.

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