US CPI Analysis: Straightforward and Serious

Apr 10, 2024

Hello everyone,

The headline inflation rate has gone up more than expected, coming in at a 3.5% increase. That's higher than last time's 3.2% and certainly more than what was anticipated. This is significant because it suggests that the Federal Reserve's efforts to control inflation might not be as effective as we thought. With inflation on the rise again, it's likely that the Fed won't be able to cut rates just yet.

Looking at the month-over-month inflation figures, we see a rise of 0.4%, which again is higher than the expected 0.3%. This paints a picture of persistent inflationary pressure.

The core CPI data, which excludes volatile items like food and energy, also reported higher numbers than anticipated. This is critical because it shows a broader, underlying inflation trend that the Federal Reserve needs to address seriously.

As a result of this data, we can expect the US Dollar (DXY) to strengthen, while riskier assets, like stocks, might face some tough times. The S&P 500, for instance, is already showing signs of potential double-bottoming, indicating further downward pressure.

In a nutshell, this latest inflation report suggests that the Federal Reserve's rate hikes haven't been as successful in curbing inflation as hoped. It's a situation that I've been wary of since the rate increases began. Inflation, contrary to some expectations, isn't showing signs of easing off.