AFMC - U.S. Inflation Not As Bad As Feared But Still Too Hot

2024-04-27 05:50:00 ET

Summary

• Quarterly inflation data surprised to the upside and led the market to brace for a very unpleasant MoM print today.
• Thankfully, it was due to upward revisions, primarily to January, with the March figure coming in line with initial expectations.
• Nonetheless, inflation remains too hot and September remains the earliest opportunity for an interest rate cut.

By James Knightley

US inflation remains hot, but not as hot as feared

So the core PCE deflator has indeed come in at 0.3% month-on-month, with upward revisions to January and February, rather than the 0.48% MoM implied by the quarterly PCE deflator from yesterday, assuming no revisions. In the great scheme of things, inflation was still far too hot in the first quarter, but the monthly profile doesn't look as concerning as it could have done so we are seeing a little bit of a relief rally in Treasuries....

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