Today is Fed funds decision day. Around 2 pm EST we’ll know if fed funds rate remains at 5.25% (upper bound) or we have another hike. Inflation for the month of May was published yesterday and it left two messages: headline inflation was better than expected at 4% YOY, thanks to the most volatile components, food and energy. Core inflation, which excludes those two components looks stickier, and came in a little bit worse than expected at 5.3%. At this pace, we may reach the 2% mark in headline inflation before the end of the year. And yet, the #reflexivity nature of the market may adapt to this context and respond to the fed pause with a #meltup, putting the fed again in an uncomfortable position, if the results were to derail #cpi from its downward trend.
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