Just one dot, even as US inflation dips
Thursday 13th June 2024
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It's been a fascinating session overnight. Early Wednesday US markets responded positively to weaker CPI numbers. Bond yields fell sharply, alongside a dip in the US dollar and more enthusiasm for equities. There must have been an expectation that the numbers would be reflected in a more dovish approach by the Fed, but the dot plot from FOMC members told a very different story, with the median expectation for just one cut this year. NAB\u2019s Gavin Friend talks through the response, highlighted that the plot is a set of opinions, not a forecast and its he hard numbers that count. The next of those will be US producer prices out today, which fed into the PCE, the Fed\u2019s preferred inflation measure. So, markets haven\u2019t fully pulled back to their pre-CPI positions, but can we expect that if the producer prices aren\u2019t as encouraging?
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