US CPI Report Set to Influence Fed Decision and Market Sentiment

6月12日

US CPI Data Expected to Show Moderating Price Pressures Ahead of Fed Decision


Key Highlights:

• Expected CPI Rise: The US Consumer Price Index (CPI) is forecast to rise by 3.4% year-over-year (YoY) in May, maintaining the same pace as in April.
  
• Core CPI Inflation: Annual core CPI inflation is anticipated to slightly decrease from 3.6% in April to 3.5% in May.
  
• Impact on US Dollar and Fed Rate Cut Expectations: The upcoming inflation data could influence the US Dollar value and market expectations regarding a September rate cut by the Federal Reserve (Fed).
  
  Detailed Analysis:Upcoming CPI Data Release:
  The Bureau of Labor Statistics (BLS) is set to publish the highly anticipated Consumer Price Index (CPI) inflation data for May on Wednesday at 12:30 GMT. This report is expected to bring intense volatility to the US Dollar, as any surprises in the inflation figures could significantly impact market expectations for the Federal Reserve's rate cut decisions in September.
  
  Inflation Expectations:
• Overall CPI: Expected to rise by 3.4% YoY in May, consistent with April’s rate.
  
• Core CPI: Forecast to inch down to 3.5% YoY from 3.6% in April.
  
• Month-over-Month (MoM) Changes: The CPI is anticipated to increase by 0.1% in May, down from a 0.3% rise in April. Core CPI is likely to hold steady at a 0.3% MoM increase.
  
  Federal Reserve’s Stance:
  In a recent moderated discussion, Federal Reserve Chairman Jerome Powell adopted a dovish stance, expressing lower confidence in inflation moving back down and suggesting it is unlikely that the next move would be a rate hike. Powell's comments came just before the April CPI data release, which showed softened headline and core inflation.
  
  Labor Market Impact:
  A strong US labor market report, showing a substantial increase in Nonfarm Payrolls and higher-than-expected Average Hourly Earnings, has tempered market expectations for a September rate cut. Despite earlier optimism for rate cuts, the robust labor data has led markets to reassess the likelihood of such cuts.
  
  Banks' Expectations for CPI:
• Goldman Sachs: Predicts CPI to be at 3.3% year-over-year, slightly lower than the previous month.
  
• JP Morgan: Expects CPI to remain stable at 3.4%, indicating no significant change.
  
• Morgan Stanley: Anticipates a slight decline to 3.2%, reflecting easing inflation pressures.
  
• Bank of America: Foresees CPI at 3.3%, aligning with a gradual slowdown in inflation.
  
  Analysts’ Forecasts:
  According to TD Securities analysts, core inflation is expected to slow to a "soft" 0.3% MoM in May, with the headline likely rising by a softer 0.1% due to a significant decline in energy prices. They also noted a potential for a dovish surprise with an unrounded core CPI forecast of 0.26% MoM.
  
  Conclusion:
  The upcoming US CPI data release is crucial, with potentially significant impacts on the US Dollar and market expectations for Federal Reserve rate cuts. A CPI reading in line with expectations could reinforce current market positions, while any deviation could trigger substantial market volatility.
  
  This comprehensive analysis outlines the expectations and potential impacts of the upcoming CPI data, providing valuable insights for market participants.