Announced this morning, the Consumer Price Index increased 0.4% in April, as expected and higher than the previous month. It grew 4.9% on an annual basis. Monthly prices for Used Cars and Trucks, up 4.4%, and Gasoline, up 3.0%, were relatively strong, while monthly prices for Utility gas service (natural gas), down -4.9%, were weak. The core rate, which excludes prices for food and energy, increased 0.4% in April, as expected and the same as the previous month. It increased 5.5% on an annual basis, a slightly lower annual level than the previous month.
Overall, inflation measures came in as expected, but stay elevated as monthly figures continue increasing and annual figures are still well above the Federal Reserve’s target. Despite parts of the financial system and economic data showing stress, inflation is sticky and persisting in the system. Furthermore, many companies have reduced future guidance in recent earnings reports, highlighting the difficult environment. The Federal Reserve may be close to the end of rate increases that started last year, but they are likely to keep tight monetary policy in place in the coming months until inflation moves lower and closer to their goal.
In all, the 10-year US treasury yield is lower following the report and equity futures are higher as we head into the market open.
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