US: Finding the Turning Point – ANZ
Research Team at ANZ, suggests that despite the strengthening US labour
market – initial jobless claims (at 253k) are at a 42 year low and real
labour earnings growth is strengthening – signs of a definitive firming
trend in US inflation remain elusive.
Key Quotes
“The
lows in US inflation certainly look to be behind us. Annual core CPI
inflation, at 2.2%, has been above 2% for five consecutive months and
the recent lift in oil prices (if sustained) and the lagged impact of
the lower USD will likely contribute to further climbs in headline
inflation (currently 0.9% y/y).
Despite all this, the CPI report
overnight did not look to provide the smoking gun that some were
looking for to posit the Fed is behind the curve, with 10 year Treasury
yields still parked below 1.80% and with current market odds for a June
rate hike at just 17%, and hike odds at just over 50% by the end of the
year. If views on the inflation outlook harden and yields ‘snap’ higher,
brace for market fallout as asset values are ‘reassessed’. But an
immediate catalyst still looks hard to find.”
(Market News Provided by FXstreet)
