Fri. May 24th, 2024

Looks like Fed Ain’t Cutting as Inflation Heats Up

Samantha Parker By Samantha Parker May18,2024 #finance

Poof. Another Fed cut was priced out today in response to hot CPI data.

Data courtesy of CME Fedwatch, calculation and chart by Mish

Word of the Day: Hot

Bond yields are up sharply and interest rate odds tumbled following a hot CPI report by the BLS today.

Rate Cut Odds

  • Odds of a rate cut in June fell to 18.6 percent today from 57.4 percent yesterday. A week ago, rate cut odds were 62.3 percent.
  • Looking ahead to December of 2024, another rate cut was priced out today. The weighted average expectation in December is now 4.93 percent up from 4.72 percent yesterday.
  • A month ago, the weighted average expectation for December was 4.43 percent. That’s a difference of two full quarter-point cuts.
  • We have gone from 6+ rate cuts projected in December of 2023 for December of 2024 to 1+ cuts now.

Bond Yields

  • 30-Year: +0.084 to 4.583 Percent
  • 10-Year: +0.143 to 4.506 Percent
  • 2-year: +0.175 to 4.922 Percent

What Happened?

The CPI rose 0.4 percent in March. R

Rent is up another 0.4 percent in March with gasoline up 1.7 percent. Together, the pair was about half of the total rise.

CPI data from the BLS, chart by Mish

Please note The CPI Rose Sharply in March Led by Shelter and Gasoline

Year-over-year the CPI rose by 3.5 percent.

Click on the above link for more details.

I warned about a steep increase in year-over-year inflation yesterday when I commented Expect Year-Over-Year Inflation to Increase

Last month, the reported year-over-year CPI increase was 3.2 percent.

Expect a year-over-year increase of 3.4 to 3.5 percent this month, but rent is a wild card.

Judging from the bond market and CME Fedwatch rate hike reactions, the hot CPI was not generally expected.

Samantha Parker

By Samantha Parker

Samantha is a seasoned journalist with a passion for uncovering the truth behind the headlines. With years of experience in investigative reporting, she has covered a wide range of topics including politics, crime, and entertainment. Her in-depth analysis and commitment to factual accuracy make her a respected voice in the field of journalism.

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2 thoughts on “Looks like Fed Ain’t Cutting as Inflation Heats Up”
  1. I believe the recent CPI data clearly indicates that a Fed rate cut is becoming less likely. The inflation heating up is evident in the rising bond yields and reduced rate cut odds. It’s crucial to keep an eye on the economic indicators and anticipate potential changes in monetary policy.

  2. What impact will the rise in CPI and bond yields have on the economy moving forward?

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