Wednesday, May 15, 2024

""Trifecta Of Dovish News... Consistent With Fed Cutting In September": Wall Street Reacts To Weaker CPI Print"

Oops, wrong ZH headline. The copper story is in a gated community with guards and attack dogs and... "Copper Overheated: AI-Driven Rally Getting Ahead of Itself"

The body of our link is unchanged. Apologies to all who came expecting the red stuff.

From/via ZeroHedge/ May 15:

With the CPI report came in on top of expectations on 3 of the 4 closely watched metrics, with just headline CPI coming in at 0.3%, just shy of the 0.4% expected (with the retail sales print coming in far uglier and missing across the board), there has been some debate among the usual commenting suspects whether this inflation report was enough to tip the scales to an earlier rate cut or not, although the consensus seems to suggest that the print was enough to keep September, if not the July, FOMC meeting in play for a rate cut.

Below we quote some of the most active Wall Street economists and strategists who have already manged to sneak in a bullet point or two with their kneejerk response to the CPI print.

Neil Birrell, CIO at Premier Miton Investors:

“The usual excitement over US inflation ended up being a damp squib, as it came in exactly as expected. However, retail sales were weaker than expected and the core rate is back to levels not seen for quite some time, which might well see optimists calling for rate cuts and markets rallying.”

Capital Economics

"Core CPI was even better than it looked, particularly given that we already know the PPI components that feed into the Fed’s preferred PCE deflator measure came in, on balance, weaker than expected. We estimate that core PCE increased by around 0.20%m/m. All things considered, this is consistent with the Fed cutting interest rates in September."

David Russell, Global Head of Market Strategy at TradeStation

"Shelter didn’t ease as hoped, but there was improvement in transportation and healthcare. The number wasn’t perfect, but we’re staggering toward lower inflation. Weaker data on retail sales and the Empire Index also suggest growth is slowing, which keeps rate cuts on the table. It was a trifecta of dovish news."

Nick "Nikileaks" Timiraos, WSJ resident Fed leaker:

"One good print can't offset three unfavorable ones. It may take a couple more for officials to get over the PTSD of the Q1 inflation. It reduces the risk of any shift to a neutral bias (ie, open the door to hikes)."

Florian Lepo, Lombard Odier Asset Management

“With this in-line inflation print, rates are likely to break the [4.4%] level, dragged down by real rates. With that, the dollar should fall, supporting most assets labeled in it.”

Rubeela Farooqi, chief US economist at High Frequency Economics:

“Overall, price pressures remain elevated but are moving in the right direction. We think the data support the case for a patient approach on policy decisions from the Fed going forward although the base case remains one of lower rates this year.”....