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May’s Inflation Data Better Than Expected

May’s inflation report which came in better than expected at 3.3%.
 
   
     
May’s Inflation Data Better Than Expected

The big news in the markets today is May’s inflation report which came in better than expected at 3.3%. Economists were expecting that figure to come in at 3.4%.

This was mostly led by prices for energy, gasoline, utilities, and insurance decreasing.

But this better-than-expected CPI reading has caused the markets to erupt in a bullish roar today, with some hoping for an interest rate cut at the end of the Fed’s two-day meeting.

The Dow was up about .15% by noon, the S&P was up over 1%, and the Nasdaq Composite was up over 1.7% by lunch.

By the end of today, I expect the major indices to be sitting somewhere between today’s open and its highs. So not exactly a best-case scenario but not exactly a worst-case either. 

But don’t hold your breath.

Most forecasters say that chances of a rate cut from the Federal Reserve are highly unlikely. And I agree.

The big reason why is because Federal Reserve policymakers have stressed the need for several months of declining inflation and price pressures before they would ever consider lowering interest rates.

We are simply not at that point yet, despite some in the market rejoicing.

Raymond James Chief Economist Eugenio Alemán appears to be among the interest rate cut optimists and shared this earlier today:

"The CPI release for May is very good news for the Federal Reserve and it is going to be even better news for the PCE price index, which will be released at the end of the month."

Now remember, the Fed is looking to target a 2% inflation rate here, we are still far above that, and inflation had seemed to stabilize in the mid to low 3% range… But we are nowhere close to where things need to be to see an interest rate cut.
 
 
All in all, this CPI/inflation report is unlikely to have any effect on the Fed's looming decisions on whether or not to cut rates later today.

They are set to release their interest rate decision at 2 pm today, with a live press conference from Jerome Powell Scheduled for 2:30 pm.

Much of Wall Street will be watching his statements closely for hints of when we can expect rates to drop.
To your trading success, 
 
 

Nate

P.S. Today’s momentum in the market caused us to win our sixth Automated Options Trade in a row. We are now 6/6 and at a 100% win rate since launching live. 

Tomorrow I’m going live to walk everyone through it! You can sign up right here. 
   
 
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