As I wrote for some time:
(i) it is difficult to forecast inflation, much less its monthly changes - e.g. JPMorgan gave only a 2.5% chance for core inflation to print below 0.2% in May - and it turned out to be 0.16% MoM - see Figure 1, second panel from the top;
(ii) it is easier to forecast, as I have written for some time, that such a very dovish report will be published within the next 3-4 months - it was published today...
(iii) shelter inflation has not dropped (yet), the monthly change is still +0.40% - and this is good news - there is potential for further dovish reports in the coming months - Figure 2 and 3. Figure 4 additionally shows the leading series of the ApartmentList;
(iv) contribution to the monthly CPI change: Figure 5 shows the contributions with details of services inflation (core commodities and core services), in addition Figure 6 shows the Energy and Food contributions. On both an annual and monthly basis, Shelter is by far the largest positive contributor…
(v) Such a CPI report is a complete comfort for the FED - but they did not want to show it today, neither in the projection (the projection is hawkish with only one cut in 2024), or especially during the press conference;
(vi) All in all, for the market the macro data itself should remain more important than the FED and its forward guidance + the valuation of the next pivot option, such as the one from December 2023.