"Success comes down to rare moments of opportunity. Be open, alert and ready to seize them."
At the start of this week, I wrote in the Sunday's US Employment wrap that I'm now in mode READY to fade the richness in pricing in Fed Fund Futures and voila, CPI release was the trigger.
Yields on US2s dipped to 4.67% (17.7 bp off highs) and US10s to 4.25% (17.60 bps off highs) and DXY fell from 105.30 levels to 104.25 levels on the CPI release.
The U.S. CPI report was benign in much aspects, coming in below consensus expectations and printing a mom reading of 0.01% on the headline number.
Readings on Super Core Services at -0.07% mom were a reason for celebration while readings on the shelter component were a sore reminder of the stickiness of the numbers. Going into second half of the year, as adverse base effects kick in, inflation stickiness could add fuel to the "higher for longer" narrative.
Please look at the table below for a summary.
Post the CPI Release, Median f/c for Core PCE numbers are at very benign 0.14% mom (prior reading 0.25%) and 2.60% yoy (prior reading 2.80%).
I've marked the areas of interest on the US 2Y Chart. The PPI number will now be an important release to inform us on PCE estimates.
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