Trump urges for interest rate cuts again, but the 'New Federal Reserve News Agency' dampens expectations: the April CPI did not reflect the impact of tariffs, and inflation pressure will emerge afterwards.
According to Timiraos, economists believe that tariffs will end the recent inflationary lull and drive up prices in the coming months; the tariff policy is like a "roller coaster," with April's inflation providing almost no reason for the Federal Reserve to stop watching; if there are no extensive tariffs in April, this data might be enough to prompt the Fed to resume rate cuts, while costs may rise in the coming months, possibly leading the Fed to remain inactive.
After the CPI reported good news, Trump called out again: the Federal Reserve should lower interest rates quickly, do not block the USA's rise.
① After the inflation report was released, USA President Trump once again pressured Federal Reserve Chairman Powell, demanding that the central bank take action to lower interest rates; ② Trump imposed a 10% baseline tariff on nearly all countries and implemented or threatened additional tariffs on key industries, raising concerns about rising costs for USA consumers and economic slowdown.
Dollar Could Lag U.S. Equities After U.S.-China Progress -- Market Talk
In April, the USA's CPI unexpectedly fell to a new low since 2021, while the market expects tariff impacts are still to come.
① In April, the CPI in the USA rose 2.3% year-on-year, with an expectation of 2.4%; the core CPI grew by 2.8% year-on-year, meeting expectations; ② Since April is merely the first month of the USA's comprehensive tariffs taking effect, the market expects a larger impact to become clear in the following months; ③ Even in such a report, traces of soaring prices of imported Commodities can still be found.
Inflation cools down! The USA's April CPI year-on-year is 2.3%, the lowest level since February 2021.
The core CPI increased by 2.8% year-on-year, the lowest rate since the inflation outbreak in the spring of 2021. Housing costs remain a key factor in inflation, while airfares, used car prices, and food prices have seen a decline. Nevertheless, the impact of tariffs has not been fully realized, and companies may still be digesting inventory.
Inflation data unexpectedly "dropped a frame"! The Federal Reserve's interest rate cut expectations for September are rekindled. How do traders interpret this "delayed compensation"?
On Tuesday (May 13), the USA's April Consumer Price Index (CPI) data was released, showing that inflationary pressures have eased somewhat, providing a complex signal to the market. The overall CPI rose 0.2% month-on-month, lower than the expected 0.3%, and year-on-year it fell from 2.4% to 2.3%, also below the expected 2.4%. The core CPI (excluding food and Energy) rose 0.2% month-on-month (expected 0.3%) and year-on-year remained flat at 2.8%, in line with expectations. This unexpectedly moderate data, combined with recent uncertainties in tariff policies, triggered an immediate market response, reshaping expectations for the Federal Reserve's interest rate cuts.
USD/CAD has risen for five consecutive days! What kind of market trend will the USA inflation data bring?
On Tuesday (May 13), the USD/CAD exchange rate continued its upward trend, rising for the fifth consecutive Trade day, just a step away from the psychological barrier of 1.4000 during the Europe Trade session. Although the USA Consumer Price Index (CPI) is about to be released, the USD slightly retreated, but the exchange rate remained resilient. However, the rise in Crude Oil Product prices may provide support for the CAD, potentially limiting the further rise of the USD/CAD exchange rate. As an oil-exporting country, the Canadian economy is quite sensitive to the fluctuations in Crude Oil Product prices, and rising oil prices usually strengthen the CAD. The price of West Texas Intermediate (WTI) Crude Oil Product continued to perform strongly, marking the fourth consecutive Trade.
Dollar Could Rise If U.S. Core Inflation Remains Sticky -- Market Talk
USA's April CPI may show signs of the impact of tariffs, with the real inflation storm expected in the next two months.
In April, the CPI in the USA is expected to increase by 0.3% month-on-month, with the core CPI also rising by 0.3%. The impact of tariffs may be reflected in areas such as Outfits, Housewares, and communications, but most of the tariff impact is expected to be realized in June and July. Given the current market's optimistic sentiment regarding tariff easing, the market may be insensitive to any unexpected movement in the CPI.
April Inflation Report: What You Need to Know -- WSJ
Goldman Sachs Cuts Chances of U.S. Recession to 35% on Trade Optimism -- Market Talk
U.S. stocks are no longer the "dominant force"! JPMorgan warns: three major driving factors are weakening.
JPMorgan recently released a Research Report stating that the trend of the USA stock market outperforming other Global stock markets for a long time may be reversing.
Investors Turn Cautious Ahead of U.S. Inflation Data -- Market Talk
U.S.-China Tariff Deal May Dim Impact of U.S. CPI Data -- Market Talk
U.S. Economic Growth May Slow Sharply to 1.4% This Year, OCBC Says -- Market Talk
The Federal Reserve's remarks have reversed the market's dovish expectations, and the USD has rebounded for the third consecutive week.
Looking back at last week, the dollar was boosted by hawkish comments following the US-UK trade agreement and the Federal Reserve's interest rate decision, recording a weekly increase against most major currencies.
Inflation resilience reappears: Signs of tariff impact are beginning to show, and the USA's CPI is expected to rebound in April.
A survey of economists indicates that inflation in the USA is expected to accelerate in April, with the Consumer Price Index rising by 0.3% compared to March.
The China-US tariffs have "broken the ice"; Goldman Sachs expects the Federal Reserve's first rate cut to be delayed until December.
Goldman Sachs currently expects the Federal Reserve to make its first rate cut in December, and it has adjusted the peak of the core PCE inflation path to 3.6%.
Wall Street drastically reduced the expectation for the Federal Reserve's interest rate cuts overnight! Goldman Sachs: the next rate cut will have to wait until December.
After the United States and China issued a joint statement on Monday to ease trade tensions, traders on Wall Street and in the interest rate markets have lowered their bets on interest rate cuts by the Federal Reserve within this year; currently, only two rate cuts are priced in for 2025, with a significant delay in expectations for the next rate cut window.
Tariff pressure is easing, shipping demand is about to surge, but inflation in the USA may still be difficult to alleviate.
Although the suspension of tariffs brings short-term relief, with more goods being loaded, container freight volumes will surge in the next four to six weeks. This will promote growth in Marine Transportation, truck Transportation, and Railroads, but it will also increase costs for importers. Future policy uncertainty remains high, and businesses face challenges in their Operation. Some industries have tight inventories, which may lead to shortages in stock again.