Cold May CPI Sends Stocks And Bonds Higher, Tariff Impact Muted

Summary

• The May CPI report showed softer-than-expected inflation, with headline and core rates both below consensus, boosting stocks and bonds on the news.
• Key inflation drivers like car prices and airfares fell, and real-time shelter data suggests true inflation may be below the Fed's 2% target.
• Market expectations for Fed rate cuts increased, now pricing in two cuts this year after the tame CPI print.
• The report signals muted tariff impact on consumers, and attention now shifts to PPI, retail sales, and the upcoming Fed meeting for further direction.

zimmytws

The May CPI report came in much softer than expected. Headline inflation rose just 0.081% from April, below the consensus forecast of 0.2%, while the core rate, which removes food and energy, increased by 0.13%, compared with estimates of 0.3%. The inflation data brings

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