US March CPI 3.5% y/y versus 3.4% expected

Headline measures:

• CPI y/y +% versus 3.4% expected
• Prior y/y 3.1%
• CPI m/m +0.4% versus +0.3% expected
• Prior m/m 0.3%
• Unrounded +0.359% m/m

Core measures:

• Core CPI m/m +0.4% versus +0.3% expected. Last month 0.4%
• Unrounded core +0.359% vs +0.358% prior
• Core CPI y/y 3.8% versus 3.7% expected. Last month was 3.8%
• Shelter +0.4% versus +0.4% last month
• Shelter y/y +5.7% vs +5.7% prior
• Services less rent of shelter % m/m vs +0.6% prior
• Real weekly earnings +0.3% vs 0.0% prior
• Food +0.1% m/m vs +0.0% m/m prior
• Food +2.2% y/y vs +2.2% y/y prior
• Energy +1.1% m/m vs +2.3% m/m prior
• Energy +2.1% vs -1.9% y/y prior
• Rents +0.4% m/m vs +0.5% prior
• Owner’s equivalent rent +0.4% vs +0.4% prior
• Full report

Ahead of the report, the market is pricing in 68 bps in Fed easing this year and USD/JPY was trading at 151.80 with EUR/USD at 1.0860. S&P 500 futures were up 7 points and 2-year note yields were trading at 4.73%.

Afterwards, the Fed funds futures market is pricing in just 48 bps in easing. USD/JPY has jumped to 152.41 and EUR/USD has fallen to 1.0781. S&P 500 futures are down 70 points and 2-year yields rose to 4.90%.

“Housing inflation is puzzling because if you look at market rents, they
down but the official numbers haven’t come down,” Chicago Fed President Austin Goolsbee said last week.

The shelter index increased 0.4% in March and was the largest factor in the monthly increase in the index for all items less food and energy. The shelter index increased 5.7% over the last year, accounting for over sixty percent of the total 12-month increase in the all items less food and energy index, according to the BLS.

Medical care is also a growing problem, up 0.5% after some hot indications in the PCE report.

This article was written by Adam Button at www.forexlive.com.