Prior was 3.4%
Unrounded +3.738% vs +3.397% prior
CPI m/m +0.6% vs +0.6 exp
Prior CPI was +0.4%
Core readings:
Core y/y 2.6% vs 2.5% expected
Prior core was 2.4%
Core unrounded +2.564% y/y vs +2.446% prior
Core m/m +0.33% vs +0.2 expected
Prior m/m +0.3%
Unrounded m/m vs +0.318% prior
Core goods +0.3% m/m vs +0.11% prior
Real weekly earnings -0.5% vs +0.2% prior
Supercore y/y +3.13% vs +3.022% prior
Ahead of the report, the market was pricing in a 21% chance of a rate hike in October and 27 bps in hikes this year. The October number is up to 47% and there are now 36 bps priced in this year. USD/JPY was trading at 158.46 ahead of the report and 158.82 afterwards.
Key sub-components:
Owners’ equivalent rent: +0.3% vs +0.2% prior
Rent of primary residence: +0.2% vs +0.2% prior
Motor vehicle insurance: +0.1% vs -0.8% prior
Airfares: +1.2% vs +2.7% prior
Used cars: +0.7% vs +0.4% prior
Apparel: +0.3% vs 0.0% prior
Medical care: +0.1% vs -0.2% prior
Lodging away from home: +2.0% vs +2.4% prior
Energy m/m: +5.2% vs +2.1% prior
Gasoline m/m: +9.1% vs +3.9% prior
Food m/m: 0.0% vs +0.1% prior
New vehicles: +0.2% vs +0.3% prior
The euro is immediately lower on the report as the US dollar jumps across the board.
Stocks are taking a more-constructive view with S&P 500 futures down 26 points.
In fitting with the hawkish take in the markets that has 2-year yields up 13.5 bps, the Bank of America CEO on the earnings call just now said that consumers are spending and the economy is resilient.” There is a worrisome outcome unfolding where the US economy continues to strengthen and is further fuelled by the AI spending boom. The Fed will be forced to hike rates further and bond yields will overshoot, leaving the other parts of the economy — housing in particular — to bear the brunt of the adjustment.
This article was written by Adam Button at investinglive.com.
