Annualized CPI Up Less Than Expected
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade but are higher now after the release of the consumer price index.
The April consumer price index increased 0.4% as expected, and on an annualized basis the consumer price index was up 4.9% when an increase of 5.0% was anticipated.
The May Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. In April it was 2.8%.
Stock index futures have performed very well recently despite a variety of bearish news.
The U.S. dollar index declined when the U.S. consumer price index was released.
The Bank of England is expected to hike interest rates for the 12th consecutive meeting tomorrow. Traders are anticipating the Bank of England will hike interest rates by 25 basis points to 4.5%. Analysts are predicting interest rates will increase further to approximately 4.80% later this year. The U.K. is contending with the fastest inflation rate among the Group of Seven nations, with annual price gains above of 10.0%.
Governor Andrew Bailey will hold a press conference and unveil the BoE’s latest economic forecasts.
The index of leading economic indicators in Japan, which is used to gauge the economic outlook for a few months ahead, declined to 97.5 in March 2023 from an upwardly revised 98.2 in the previous month.
Longer term, interest rate differentials suggest lower prices for the U.S. dollar and higher prices for the euro currency.
INTEREST RATE MARKET FUTURES
Yesterday New York Federal Reserve President John Williams said inflation remains “too high,” despite recent aggressive interest rate hikes.
Futures are higher in light of the release of the consumer price index.
The Treasury will auction 10-year notes today.
Most likely the FOMC will keeps its fed funds rate unchanged at its June 14 policy meeting.
The technicals and fundamentals remain supportive.
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