June 12, 2024 at 07:47PM
We’re going to have low readings of y/y inflation drop out in H2
Because of that, we get a slight rise in core inflation because of that
If we get more readings like today, it would help
We don’t have a high confidence in forecasts
Regardless of the dots, everyone at the FOMC would say they’re ‘very data dependent’
The bolded is all that really matters here. It’s safe to go back to watching data.
We are seeing gradual cooling in the labor market as it moves into better balance
There’s an argument that labor gains are overstated but they’re still strong
Our sense is that the rate cuts that were going to take place this year will take place next year
We will have to see where the data light the way
Today was a better inflation report than almost anyone expected
We’ve made pretty good progress on inflation
Wages are still running about a sustainable path
Wages are not the principle cause of inflation but needs them to come down for overall inflation to get back to 2%
It may take ‘several years’ for bulge from higher market rents to filter through
Credit card balances and defaults have been going up but they’re not at high levels
The US dollar continues to grind higher on Powell’s comments. That argues that the market thought Powell would surprise on the dovish side as well, or squarely put a Sept rate cut on the table, particularly after CPI.
This article was written by Adam Button at www.forexlive.com.
