US Consumer Prices Hold At Record Highs - Up 20% Since Biden Elected while Hawkish 'Dots' Spoil Markets' Soft-CPI Party


Soft a CPI (bad data?) sparked a melt-up in stocks, bonds (prices), gold, and crypto which held in place until The Fed statement which sent a more hawkish message to markets than was expected.

There were 10 Fed members who saw rates at 4.625% or below by end 2024 (implying at least 3 cuts) in March2024... now there are none...

Sticky inflation.

The headline consumer price index was unchanged MoM in May - the smallest change since July 2022 - just less than the +0.1% MoM expected. On a YoY basis, headline CPI rose 3.3% (less than the 3.4% exp) - but very much stuck in a range well above the 2% target for over year now.

Source: Bloomberg

But some 'good' news in the sense that Core CPI rose 0.2% MoM (below the 0.3% exp) pulling the YoY change down to 3.4% (from 3.6% and below the 3.5% exp). That is the lowest Core CPI YoY since April 2021.

BUT, Core CPI has not had a down-month since President Biden was elected.

Source: Bloomberg

I note that consumer prices have not fallen in a single month since President Biden's term began (July 2022 and May 2024 was the closest with 'unchanged'), which leaves overall prices up over 19.5% since Bidenomics was unleashed (compares with +8% during Trump's term).

And prices have never been more expensive...

That is an average of 5.4% per annum (almost triple the 1.9% average per annum rise in price during President Trump's term).

Source: Bloomberg

Will the next President and Fed head face a 70s redux?

Source: Bloomberg

And is this guaranteed if Powell decides "insurance" cuts are required (for Biden?)

  • Powell Doesn't Completely Rule Out September Cut

Chair Powell doesn't completely shut the door down for a September cut, but his pushback was quite soft in my opinion. He used to say "SEP is just a forecast, everyone can have their opinion," but not this time.

We shall all see in good time...

So US stocks finished higher in which the S&P 500 and Nasdaq extended on record levels.

Source: Market Watch

USD dropped so the AUD was up (to around USD$0.6662) while Bitcoin after initialling hitting over USD$70K reversed all the gains thanks to the hawkish Fed statement.

Happy Thursday!

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