Has peak inflation been reached in the US?

Growth concerns continue to drive the markets: after a strong rebound, the US equity indices almost all ended lower yesterday, but a final surge saw the S&P and Nasdaq rise slightly, but not the Dow Jones. The US 10-year yield fell back below 3% and the USD strengthened a little, confirming risk aversion. The rebound in the Asian markets comes from information on a drop in Covid cases in China, which suggests a gradual recovery in activity.

The event of the day and of the week is the release of the US inflation figures for April. This is an event because a drop is expected (from +8.5% to +8.1% yoy) and if this is indeed the case, it is reasonable to think that the inflation peak was reached in March. We discussed this in the Macro & Oil Weekly Report published on Monday. The graph below also illustrates that the trend in core inflation already seems to be slowing down since the beginning of the year, especially in goods prices which had soared with the Covid epidemic. With the favourable base effect on energy prices pulling the inflation rate down, the markets will probably focus more and more on core inflation and precisely watch if the strong wage increases or the foreseeable acceleration of rents in the wake of real estate prices push up the prices of services and prevent or slow the decline. This will also be a crucial question for the Fed.

Share this news :

You might also read :

ES-economy
July 15, 2021

US inflation remains high

US inflation grew by 5.3% y/y in June according to the BLS on Tuesday. If we remove the volatile effect of gas prices and food…
ES-oil
October 11, 2021

Electric spillovers

Futures crude markets continued to rise on early Monday, with WTI crude prompt prices nearing 81 $/b at the prompt while ICE Brent futures climbed…
Join EnergyScan

Get more analysis and data with our Premium subscription

Ask for a free trial here

Don’t have an account yet? 

[booked-calendar]