US: Core CPI likely to print 0.2% mom for April – Deutsche Bank

Analysts at Deutsche Bank point out that today’s US CPI, the consensus for April’s core print is +0.2% mom.

Key Quotes

“If that sounds like familiar territory, then that’s because it is. Including today, the last 31 months going back to October 2015 have seen a consensus of +0.2% mom for core CPI. Of the last 30 readings, 17 months have matched consensus and 13 have missed. That said only 5 of the last 13 months have seen a +0.2% reading with most of the misses being to the downside. So we’ll see what today brings. Our US economists also expect a +0.2% mom core print today (and an oil price driven +0.3% mom headline reading) which would have the effect of raising the annual rate by a tenth to +2.2% yoy and to the highest since February 2017.”

“As for the market, it’s worth noting that the market implied probability of 4 Fed rate hikes this year (or a further 3) remains anchored around 37% which is where it has roughly been since mid-April now (June is 100% priced in for a hike). So we’ll see if today’s data changes that much. We should add that bond markets should get another supply test with a $17bn 30y auction scheduled for this evening. This follows a 10y auction yesterday where we narrowly missed the first 3% coupon in 7 years as the yield cleared at 2.995%. The treasury always rounds the coupon down an eighth from clearing yield so we almost made the magic 3% coupon.”