Inflation: Today’s CPI Report indicates the peak, a plateau, or?

After last week’s fifty basis point Fed increase on Wednesday and 10 year Treasury spiking to nearly 3.20% on Friday, markets were closely watching today’s release of the April CPI report for signs of relief. The Fed’s hawkish stance on inflation has magnified the significance of any indications of moderating price increases. The good: annual CPI dipped from 8.5% (last month, the highest since 1981) to 8.3% (still very high). Markets were hoping for 8.1%. The Not So Good: Core CPI rose 6.2% (estimates were 6.0%), monthly gains were higher than expectations: 0.3% headline (estimate 0.2%) and 0.6% core (estimate 0.4%). The market’s reaction was schizophrenic. Treasury yields initially jumped from about 3.00% to 3.08% before closing at 2.89%. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners