Wednesday, May 15th, 2024
The biggest economic news of the week is out this morning. The April print of the U.S. Consumer Price Index (CPI) came in slightly below last month’s re-heated levels, which are either in-line with expectations or below them, based on the metric. The most important of these are the Inflation Rate (year over year CPI on headline), which was +3.4% — 10 basis points (bps) lower than the previous month and well off the peak +9.1% from June 2022 — and core CPI year over year, which at +3.6% was 20 bps lower than March and the slimmest monthly tally in three full years.
Pre-market futures gained immediately on the news. From breakeven/mixed in the major indices ahead of the release, these numbers jumped to +190 points on the Dow, +30 on the S&P 500 and the Nasdaq +125 points at this hour. These numbers do continue to fluctuate, however, so I will revisit these figures at the end of my final paragraph below. Bond yields also shrank appreciably: to +4.35% on the 10-year and +4.72% on the 2-year. You’ll recall the 2-year yield had again breached +5% only a week or so ago.
Month over month CPI numbers are also important. Headline CPI month over month reached +0.3%, the same as the previous month and 10 bps lower than expected. Core CPI month over month was also +0.3%, 10 bps lower than March. New and used vehicles, owner’s equivalent rent and airline fares all came down in today’s latest inflation report, and in a year to date that has shown robust economic numbers to the detriment of commencing lower interest rate levels, today’s figures are a breath of fresh air.
Retail Sales for April also came in below expectations. A headline of 0.0% is notably off the +0.4% anticipated and the downwardly revised +0.6% for March. Subtracting volatile month over month auto sales, we come in as expected to +0.2% — well below the downwardly revised +0.9% previously. Ex-autos and gas was -0.1%, the lowest since January’s -0.8%. (Remember January posted the weakest Retail Sales figures since March of last year.) The Control number — a synthesis of data that re-emerges in GDP and PCE numbers, reached -0.3% for April.
Finally, Empire State manufacturing came in lower. The May print ahead of the opening bell was -15.6, below the -10 expected and the -14.3 reported a month ago. In all, this morning of inflation data offers much of what the market needs to see in order to hang onto hope for lower interest rate levels at some point this year.
It’s the first lower CPI print month over month so far this year, and is allowing yesterday’s bullish activity to continue this morning. The Dow is +150 points currently, the S&P is +25 and the Nasdaq — on the heels of a fresh all-time high — is +85 points a half hour before Wednesday’s open.
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CPI Down 1st Time in 2024, Pre-Markets Up
Wednesday, May 15th, 2024
The biggest economic news of the week is out this morning. The April print of the U.S. Consumer Price Index (CPI) came in slightly below last month’s re-heated levels, which are either in-line with expectations or below them, based on the metric. The most important of these are the Inflation Rate (year over year CPI on headline), which was +3.4% — 10 basis points (bps) lower than the previous month and well off the peak +9.1% from June 2022 — and core CPI year over year, which at +3.6% was 20 bps lower than March and the slimmest monthly tally in three full years.
Pre-market futures gained immediately on the news. From breakeven/mixed in the major indices ahead of the release, these numbers jumped to +190 points on the Dow, +30 on the S&P 500 and the Nasdaq +125 points at this hour. These numbers do continue to fluctuate, however, so I will revisit these figures at the end of my final paragraph below. Bond yields also shrank appreciably: to +4.35% on the 10-year and +4.72% on the 2-year. You’ll recall the 2-year yield had again breached +5% only a week or so ago.
Month over month CPI numbers are also important. Headline CPI month over month reached +0.3%, the same as the previous month and 10 bps lower than expected. Core CPI month over month was also +0.3%, 10 bps lower than March. New and used vehicles, owner’s equivalent rent and airline fares all came down in today’s latest inflation report, and in a year to date that has shown robust economic numbers to the detriment of commencing lower interest rate levels, today’s figures are a breath of fresh air.
Retail Sales for April also came in below expectations. A headline of 0.0% is notably off the +0.4% anticipated and the downwardly revised +0.6% for March. Subtracting volatile month over month auto sales, we come in as expected to +0.2% — well below the downwardly revised +0.9% previously. Ex-autos and gas was -0.1%, the lowest since January’s -0.8%. (Remember January posted the weakest Retail Sales figures since March of last year.) The Control number — a synthesis of data that re-emerges in GDP and PCE numbers, reached -0.3% for April.
Finally, Empire State manufacturing came in lower. The May print ahead of the opening bell was -15.6, below the -10 expected and the -14.3 reported a month ago. In all, this morning of inflation data offers much of what the market needs to see in order to hang onto hope for lower interest rate levels at some point this year.
It’s the first lower CPI print month over month so far this year, and is allowing yesterday’s bullish activity to continue this morning. The Dow is +150 points currently, the S&P is +25 and the Nasdaq — on the heels of a fresh all-time high — is +85 points a half hour before Wednesday’s open.
Questions or comments about this article and/or author? Click here>>