USD: CPI Report Shows Underlying Price Pressures Continue To Build – CIBC

US Core Inflation came out at 2.4% y/y, better than had been expected. Will it push the Fed to raise interest rates at a quicker pace?

Here is their view, courtesy of eFXdata:

CIBC Research discusses its reaction to today’s US CPI print for the month of July.

“Headline inflation appears to have plateaued, but a marginally higher reading ex-food/energy suggests underlying price pressures continue to build. Headline CPI rose by 0.2% seasonally adjusted in July, despite a slight drag from energy prices, which kept the year-over-year pace at 2.9%.

With oil prices having come off their recent highs, the annual rate of headline CPI could well edge down a little in the next couple of months before converging to the current pace of core CPI in 2019. However, core inflation was solid in July, with the 0.2% gain on the month good enough to take the annual pace up a tick to 2.4% (consensus 2.3%). While that will still leave the Fed’s preferred core PCE measure near 2% (and as such won’t change the trajectory of interest rate increases), it could see bond yields rise a little today particularly after market expectations for today’s CPI print were lowered by yesterday’s weaker producer prices data. After a run of down months, airline fares rose 2.7% to support the ex-food/energy print,” CIBC argues.

For lots more FX trades from major banks, sign up to eFXplus

By signing up for eFXplus via the link above, you are directly supporting Forex Crunch.


Leave a Reply

Яндекс.Метрика