U.S. CPI and Retail Sales Undershoot Expectations, Bringing Relief to Investors
May 15, 2024
Investors are hoping that the Fed eases sooner than now feared, and more importantly that the next interest rate change isn’t a further hike. Softer inflation and lessening consumer demand are thus seen as a good thing, and today brought modest support for each of those desires.
Consumer prices in April increased by 0.3%, the smallest monthly rise in three months and decelerating on-year inflation to a 2-month low of 3.4% after March’s half-year high of 3.5%. A 0.3% monthly uptick in core consumer price inflation lowered its 12-month rate of rise to a 3-year low of 3.6%. Total and core inflation had each peaked in September 2022 at 9.1% and 6.6%, respectively. The undershoot of these figures compared to what analysts had been projecting was thin, however, and the report reflected more elevation in gasoline and the component for shelter. Also, yesterday’s producer price inflation report exceeded forecasts, but investors were nonetheless relieved to hear news that didn’t contradict Fed Chairman Powell’s personal belief that another rate hike will not become necessary.
Fifteen minutes prior to the market’s opening bell, major U.S. stock futures were pointing to an initial rise of about 0.5%. Also, the 10-year U.S. Treasury yield fell five more basis points to 4.37% on top of a 2-bp dip earlier in the post Tuesday trading hours.
U.S. retail sales flat-lined in April versus expectations of about a half percent increase, and their 12-month increased slowed to 3.0% from 3.8% recorded between March 2023 and March 2024. In other data reported this morning, the Empire State manufacturing index slid a touch more deeply into the red this month with a reading of -15.6, and the monthly housing index of the National Association of Home Builders failed to climb higher after increasing from 34 last November to 51 in May.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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