Key insights
- Upcoming May US CPI data is expected to exceed 4% headline and 2.9% core, marking a seven-month high for core inflation. This resurgence in inflation, coupled with the ECB's anticipated rate hike on Thursday, is likely to refocus market attention on potential further hawkishness from the Federal Reserve, increasing the probability of additional rate hikes and potentially weighing on equity markets.
For those wondering if markets have more room to fall..
On Wednesday US CPI data for the month of May will be released and having looked at the latest estimates from major firms, it's almost certain headline CPI will break above 4% again for the first time since April 2023. Estimates are 4.1 to 4.2% which will bring Fed hikes back into focus.
Core CPI is also expected to edge up to a seven-month high of 2.9%, which is more concerning since this strips out oil from the headline data. For the month of May alone core CPI could add 0.5% which is quite alot for a core number in just one month.
If the Fed needs any help to become more hawkish again, the ECB may inspire them as they will already start hiking this Thursday.