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US DATA: CPI: Another Report Reducing Odds Of A 50bp Cut Next Week [2/2]

US DATA
USGlobalEM BulletFixed Income BulletsData BulletBulletMarketsEmerging Market NewsForeign Exchange BulletsRegionNorth America
  • Taking a step back, core CPI has still seen impressive disinflationary progress, with a three-month rate of 2.1% annualized, six-month of 2.7% and Y/Y of 3.2% Y/Y.
  • However, rent inflation continuing to delay a return to pre-pandemic levels and broader stickiness in core services with a large share still growing in excess of 3% Y/Y seems likely to keep the Fed wary of cutting at a faster pace than 25bps (barring some particularly large surprises in PPI).
  • That’s certainly true for the upcoming September decision although the pace after that seems likely to depend on future labor reports.
  • Indeed, implied cuts for Sep 18 have been reduced from 32bp to 28.5bp, although the pace for the subsequent three meetings is not materially changed with 39/41/38bp clips at typing.
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  • Taking a step back, core CPI has still seen impressive disinflationary progress, with a three-month rate of 2.1% annualized, six-month of 2.7% and Y/Y of 3.2% Y/Y.
  • However, rent inflation continuing to delay a return to pre-pandemic levels and broader stickiness in core services with a large share still growing in excess of 3% Y/Y seems likely to keep the Fed wary of cutting at a faster pace than 25bps (barring some particularly large surprises in PPI).
  • That’s certainly true for the upcoming September decision although the pace after that seems likely to depend on future labor reports.
  • Indeed, implied cuts for Sep 18 have been reduced from 32bp to 28.5bp, although the pace for the subsequent three meetings is not materially changed with 39/41/38bp clips at typing.