- Prior was +2.7%
- PPI -0.5% m/m vs +0.2% expected
- Ex food and energy +3.1% y/y vs +3.1% expected
- Ex food and energy -0.4% m/m vs +0.3% expected
- Ex food, energy and trade +2.9% vs +3.4% prior
- Ex food, energy and trade -0.1% vs +0.1% prior
Before today’s data slate, the market was pricing in 74 bps in Fed easing in the year ahead and we now see about 76 bps.
This is good news on inflation pressures and there are some undershoots coming in June/July that will hit the y/y numbers on base effects.
Another notable point is final demand for services fell 0.7% m/m, which is the worst in more than 10 years. Intermediate goods inputs also fell 2.0% and construction prices were down 0.4% m/m.
It’s tough to look at this and see anything but disinflation in the pipeline. If not for the trade war, the Fed would be signaling a cut in June.
This article was written by Adam Button at www.forexlive.com.
