The core CPI in the United States rose 3.6% year-on-year in April, in line with expectations, and the interest rate cut in September stabilized? 丨Global Readings

CBN

2024-05-15 21:33Posted on the official account of Shanghai Yicai

The two-year battle against inflation is turning into a protracted battle, and the Federal Reserve is grappling with the high prices that have been held so far this year.

On the 15th local time, the U.S. Department of Labor released the latest data, the consumer price index (CPI) rose by 3.4% year-on-year in April, in line with expectations, and the previous value was 3.5%, which soared to the highest level in 40 years in June last year of 9%; On a month-on-month basis, the CPI rose 0.3% month-on-month in April, with both the expected and previous values of 0.4%.

After excluding volatile food and energy prices, the core CPI rose by 3.6% year-on-year in April, down 0.2 percentage points from the previous value of 3.8%, but still significantly higher than the policy target of 2%, with an expected value of 3.6%; The indicator rose 0.3% month-on-month, also in line with expectations, compared to 0.4% previously.

Nomura U.S. senior economist Amamiya Aichi told the first financial reporter that the core CPI in April slowed slightly from the previous value in March, which will slightly reduce concerns about the re-acceleration of inflation. The agency expects the core personal consumption expenditures (PCE) price index to fall to 0.24% m/m in April from 0.32% in March, which could support the Fed's view that the acceleration of core inflation in the first quarter is an anomaly, paving the way for a rate cut in July.

Stimulated by the above news, U.S. stocks rose pre-market, as of press time, Dow futures rose 135.0 points, or 0.35%; S&P 500 futures rose 23.0 points or 0.44%; Nasdaq futures rose 74.8 points, or 0.41%.

Housing prices are stubborn, and energy prices are rebounding

In terms of sub-items, housing and gasoline contributed more than 70% of the price increase last month, of which the housing sub-item, which accounted for about one-third of the CPI, rose by 0.4% month-on-month in April, recording this increase for three consecutive months, up 5.5% year-on-year; Gasoline prices rose 2.8% month-on-month; Prices for transportation services rose 0.9% month-on-month and 11.2% year-on-year.

Amamiya Aichi expects housing inflation to remain stable in the second quarter, with rental prices gradually slowing in the medium term. In addition, super-core inflation is also expected to cool given the lower month-on-month price increases in transportation services and healthcare.

The probability of a rate cut in September is nearly 70%

According to CME Group's FedWatch Tool, traders are betting on a 69.6% probability of a rate cut in September and a 30.4% chance of keeping rates unchanged.

The day before, Fed Chairman Jerome Powell admitted at the event that his confidence in cooling inflation was not as good as before, but he reiterated that the next move is unlikely to be to raise interest rates, and it is more likely to keep interest rates at current levels, waiting for evidence of a further slowdown in inflation. "We don't expect an easy road ahead, but I think the inflation data is higher than anyone expected and it tells us that we need to be patient and let the restrictive policy work."

Mark Haefele, global chief investment officer of UBS Wealth Management, said in a report sent to CBN reporters: "The rate cut is only a postponement, not a cancellation, and the U.S. economy is expected to achieve a soft landing, that is, growth and inflation cool at the same time, the first rate cut is most likely to occur in September, and the base case is still that there will be two rate cuts of 25 basis points each time in 2024." ”

He explained his views from the following dimensions: first, based on the latest rental data, the bank still expects housing inflation to decline; Second, the ISM services PMI unexpectedly contracted in April, indicating a slowdown in overall economic activity; Third, a solid and sufficiently balanced job market is expected to accelerate the process of disinflation.

(This article is from Yicai)

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