US CPI rose for the second time in a row in March. Currently sitting at 3.5% which is a 0.4% increase since February.
These readings exceeded most forecasts.
This is bad news as the US Fed was signalling intentions to cut rates over the year. Morgan Stanley economists stated that this inflation release means the Fed may have to start their rate cuts later.
The US labour market is also looking strong, further diminishing hopes for rate cuts. Jobs in March grew by 303,000, over 50% higher than expected numbers. Unemployment also dropped to 3.8%. These numbers are important to President Biden with the upcoming elections, “That’s 15mn more people [since he took office] who have the dignity and respect that come with a pay cheque”. Traders’ bets on rate cuts in July fell to 50% from 98% and bets on June fell from 56.1% to 18.5% following the CPI announcement. Bank of America and Deutsche Bank are predicting rate cuts in December.