Stock market today: Stocks surged after CPI, with Fed looming
What impact did the May CPI report have on market expectations for Federal Reserve rate cuts?
The May CPI report showed that consumer prices increased less than expected, with the Consumer Price Index (CPI) remaining flat over the previous month and rising 3.3% over the prior year in May. This cooler-than-expected inflation data led to a shift in market expectations for Federal Reserve rate cuts. Following the release of the CPI data, markets started pricing in a roughly 69% chance that the Federal Reserve would begin to cut rates by its September meeting, up from about 53% the day prior. This shift was also reflected in the 10-Year Treasury yield, which fell about 14 basis points to 4.26%, its lowest level since April 1.
How did the core CPI, which excludes food and gas prices, change in May compared to the previous month?
The core Consumer Price Index (CPI), which excludes the more volatile costs of food and gas, increased by 0.2% in May compared to the previous month. This is a slower pace than the 0.3% month-over-month increase seen in April.
What was the percentage increase of the Consumer Price Index (CPI) in May compared to the previous year?
The Consumer Price Index (CPI) increased by 3.3% in May compared to the previous year. This was a deceleration from April's 3.4% annual gain in prices.